If you want to sell more than five motor vehicles per year in the State of Pennsylvania, you need to get a dealership license. The Pennsylvania Department of Transportation State Board of Vehicle Manufacturers oversees the licensing process and sets the requirements for a dealership license.
In this guide, we’ll give you a step-by-step process you can follow to get your Pennsylvania dealership license.
Step 1: Determine license type
The first step to getting your Pennsylvania dealer license is to determine what type of license you need. There are several different license classifications, each permits the dealer to sell a certain type of vehicle.
- Dealership license: This license lets dealers sell new or used motor vehicles.
- Auction license: This license lets dealers sell motor vehicles at auctions only.
- Manufacturer and distributor license: This license lets dealers manufacture and/or distribute motor vehicles to other licensed dealers.
- Salesperson license: This license lets the licensee work for a dealer to help them sell motor vehicles to customers.
Step 2: Get your business location
The next step is to get your permanent place of business. This business location must meet the following requirements:
- Must meet all local zoning ordinances
- Must have a sign that displays the business name
- Must have a telephone line and a publicly listed number
- Must have an office with a desk and lockable filing cabinet
- The display area must be separate from the parking area
You will need to take photographs of your location to include with your application.
Step 3: Register your business
All car dealerships are required to register their business with the Pennsylvania Secretary of State. You can find more details and all the necessary paperwork on the Department of State website.
If your business is a limited liability company (LLC) or a corporation, you will need to provide your Federal Employee Identification number during the registration process. You can get your EIN online instantly through the IRS website.
Step 4: Get a surety bond
All auto dealers must post a Pennsylvania surety bond prior to receiving a license. The surety bond provides an extra form of protection for consumers and the state. If a dealer fails to comply with their licensing regulations, damaged parties can file a claim against the bond to receive financial compensation.
The required bond amount for Pennsylvania motor vehicle dealer bonds varies depending on the license classification:
- $30,000 bonds for motor vehicle dealers, manufacturers, and full issuing agents that sell vehicles and registration plates
- $30,000 bonds for full issuing agents that only sell registration plates
- $20,000 bonds for motor vehicle manufacturers or dealers that only sell vehicles
- $10,000 bonds for motor vehicle salvors
Dealers are only responsible for paying a small percentage of the total as a premium. This is typically between 1% and 3% of the bond amount for most dealers. Your surety company determines your premium on an individual basis by evaluating your industry experience, credit score, financial history, and other factors.
Step 5: Submit application
Once you’ve met all the requirements you can now prepare your dealer license application. You can find all the application forms on the Pennsylvania Department of State website.
After you complete the form, you will need to gather all the required supporting documents including:
- Pictures of the business location
- Copy of the deed or lease for the business location
- Background check request form
- Franchise agreement (new vehicle dealers only)
You will also need to include a $65 initial licensure fee with your application. You can mail the application to the following address:
Bureau of Motor Vehicles
P.O. Box 68283
Harrisburg, PA 17106-8283
Step 6: Pass the business location inspection
After you submit your application, a representative from the Pennsylvania DOT will contact you to set up an inspection of your permanent place of business. During the inspection, the representative will look to ensure that the location meets all the necessary requirements.
Once they approve your place of business, they will issue your Pennsylvania dealership license.
Pennsylvania dealership license frequently asked questions
How do you renew a Pennsylvania dealership license?
Pennsylvania dealership licenses expire on May 31 of every odd numbered year. You must renew your license prior to the expiration date. Pennsylvania DOT will mail you a renewal notice with instructions on how to renew your license.
How much does a dealer license cost in Pennsylvania?
Pennsylvania auto dealers must pay a $65 license fee when first receiving their dealer license. Dealers must also purchase a surety bond, which can cost as low as $200.
How many cars can you sell in PA without a dealers license?
In Pennsylvania, you are allowed to sell up to four motor vehicles per year without a dealer license. If you sell five or more vehicles annually, you must get a dealer license.
How EZ Surety Bonds can help with a Pennsylvania dealership license
You now know what it takes to become a licensed auto dealer in Pennsylvania. When you’re ready to get your dealership license, EZ Surety can offer you a free online quote for your Pennsylvania auto dealer bond.
We provide competitive premiums and quick turnarounds for individuals of all financial standings. Get in touch today to learn more.