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Becoming a vehicle dealer can be a great career move. To become one, you need to first understand the vehicle industry as a whole and have a clear idea of the steps you need to take in order to successfully, and legally run your business. There are various types of vehicle dealers, ranging from new to used vehicles and even remotely operated ones that are solely run online.
Before you start with your new business endeavor, you need to check the state licensing requirements as well as developing strategies to help you be as successful as possible. To get you started with the process, we’ve created a list of the things that’ll help you navigate your way through the requirements and in order to legally obtain your vehicle dealer’s license.
If you’re looking at new business endeavors, such as becoming a motor vehicle dealer, and you’re in search of a national surety agency to help you get the appropriate surety bonds, The Surety Place is the right agency for you.
Before you apply for a license, you need to select what kind of vehicles you will sell, whether the vehicles are new, used, a combination of both, sold on a physical location, or sold without one. There are requirements for every kind, so choose carefully before you start the process of acquiring your vehicle dealer license.
Most states will ask you to choose between an option of selling new or used vehicles. If you plan to sell new vehicles, you may need to first contact the vehicle manufacturer to get their approval (franchise) before you start selling their vehicles. New vehicle dealerships can also sell used vehicles but you’ll need to acquire that license as well.
If you’re planning to sell used vehicles, you don’t need approval from the vehicle manufacturer but you still need the right type of license. Unlike new vehicle dealerships, used vehicle dealerships cannot sell new vehicles.
Physical locations come with some additional expenses and required licenses to operate. Operating your vehicle dealership solely online can be very beneficial to your business since it greatly decreases the upfront costs physical locations can have. Although running your dealership online can be money-saving, your online business needs the best marketing tools to be successful in such a competitive industry.
Once you’ve selected the type of vehicles you’ll be selling, the next step of the process focuses on handling the requirements imposed by the Department of Motor Vehicles (DMV) and Department of Licensing (DOL).
The DMV is the place where either current or future vehicle dealers check their licensing requirements and the process that comes with acquiring or renewing the licenses. These requirements are state-specific and vary greatly depending on the state you’ll be operating in. For example, in New York, if you don’t have an active Vehicle Dealer Surety Bond, you should not submit your application. If you’re from the state of New York or any other state for that matter, contact The Surety Place before you submit your application to the DMV to ensure you have the correct surety bond coverage.
Depending on the state you’ll be operating in, vehicle dealer licenses can be acquired from the DOL. In some states, the DMV and the DOL are combined, while other states have 2 specific departments that handle different affairs. Be sure to check how your specific state operates in regards to the DMV and DOL before anything is submitted. As we like to say, have all your ducks in a row to ensure a speedy approval process. The application process might be the same as if you’re acquiring your license from the DMV but it is vital to know where your application must be submitted.
One of the key steps to obtaining your vehicle dealer license is passing a financial and criminal background check. Remember, you might not be able to acquire a vehicle dealer license if you have a criminal record. When starting your company, establishing a great business plan, and strategies that will help target your future customers is crucial in every industry, especially in the one that is as highly competitive as the vehicle industry.
Location, location, location! In today’s world, everything is about location. You’re setting your business up for success if you choose your location wisely. Choosing a great location can drive your costs up but it can greatly improve your chances of being successful. When filing the paperwork, you must show proof of the lease or, if you own the property, proof of ownership. It is also important to check out zoning regulations before starting your business because it varies from state to state and city to city.
There are quite a few expenses when running a vehicle dealership. For example, you need to strategize on the cost of the location, inventory, and employees. You need to remember that getting your license issued or renewed is a one-time thing but running everything else is on a whole different scale so being on top of things is a must when you’re running your business.
They say that good marketing makes the company look smart while great marketing makes the customer feel smart. Your entire company should be considered your branding department. Make room in your budget for marketing expenses because they are crucial for your success, whether it’s the good old word-of-mouth marketing or online marketing.
All states require you to have a motor vehicle dealer bond. These surety bonds show proof that a vehicle dealer is trustworthy in their prices, services, and treatment of the customer and the vehicle itself. A motor vehicle dealer bond is meant to protect both parties. The cost of the motor vehicle dealer bond is a small percentage of the total bond cost. Surety bond agencies, such as The Surety Place, check your financial track records to ensure that you are eligible for the motor vehicle dealer bond.
To recap, if you’re interested in becoming a licensed motor vehicle dealer, these are the steps that’ll set you and your future business up for success.
If you’ve followed the process step by step, you’re ready to submit your license application to your local DMV or DOL (or both in some states).
The Surety Place, a people-first company, is here to help our clients with tailored bonding solutions, such as the ones needed when applying for a motor vehicle dealer bond. At The Surety Place, we pride ourselves in our customer service! If you have any questions regarding a bond placement, give us a call and one of our surety bond producers or account managers will be happy to help!