Car dealers in Massachusetts must obtain an auto dealer license to legally sell new or used motor vehicles in the state. The Massachusetts Registry of Motor Vehicles (RMV) is responsible for overseeing the licensing process. However, unlike most states, the specific requirements for auto dealers are determined by their local municipality.
In this guide, we’ll outline the different licensing requirements and steps you can take to get your Massachusetts dealer license:
1. Determine what type of license you need
The first step to obtaining your Massachusetts dealer license is to determine what type of license you need. While each municipality sets their specific licensing requirements, there are three standard dealer license classifications available in the State of Massachusetts:
- Class I: Lets the dealer sell new and/or used motor vehicles.
- Class II: Lets the dealer sell used vehicles only.
- Class III: Lets the dealer sell salvage parts or motor vehicle junk.
2. Prepare required documents
Next, you will need to prepare the various documents you are required to submit along with your dealer license application. The exact documents you need will vary depending on the municipality. Be prepared to provide the following documents:
- Deed or lease agreement for your business location
- Zoning compliance certificate
- Business certificate and trade name (if applicable)
- Business entity documents
- Employer tax ID
- Proof of worker’s compensation insurance
- Franchise agreement (Class I licensees)
- Proof of repair facilities (Class I licensees)
- Purchase and Sales Agreement
- Criminal background check completed by the Massachusetts Department of Criminal Justice
3. Get a Massachusetts auto dealer surety bond
If you require a Class II license you will have to obtain a Massachusetts motor vehicle dealer surety bond before submitting your license application. The bond helps protect your customers from negligent or unethical actions from your business.
If you violate the conditions of your motor vehicle dealer license, damaged parties can file a claim against the bond to receive financial compensation. In the event of a valid claim the surety will payout damages up to the total amount for the bond.
Massachusetts auto dealer bonds have a $25,000 required bond value. You will need to pay a small percentage of this amount as a premium to get your bond. This typically ranges between 1% to 3% of the bond value, depending on your individual qualifications.
4. Complete your dealer license application
Once you get your Massachusetts surety bond and gather all the necessary paperwork, it is time to send your dealer license application.
Your method for submitting your application will depend on your local municipality. Some have online applications while others only accept applications via mail.
When you submit your application, you will also need to pay a licensing fee. These can range between $100 and $200 and vary by location. For example in Boston, you need to pay a $200 fee. By law, municipalities are not allowed to charge over $200 for a licensing fee.
Upon receiving your application and paperwork, it can take up to two months for your license to be approved. If you are applying for a Class III license, a public hearing will be scheduled after your conditional approval. You will need to complete the hearing successfully to receive your license.
5. Renew your Massachusetts dealer license annually
Massachusetts dealer licenses expire annually in January. This applies to all locations across the state. To keep your license active, you will need to contact your local municipality and complete their renewal process.
If you are a Class II dealer, you will also need to renew your surety bond annually with your license.
Get your dealer bond online with EZ Surety Bonds
If you need a surety bond along with your license, EZ Surety can help make the bonding process quick and convenient. Apply online today or get in touch with any questions you have about your Massachusetts dealer license or surety bond.