Virginia Dealers License Guide

If you want to sell motor vehicles or open a car dealership in Virginia you need to get a dealers license. The Virginia Motor Vehicle Dealer Board (MVDB) of the Department of Motor Vehicles (DMV) is responsible for overseeing the licensing process.

In this guide, we’ll outline the licensing requirements and give you a step-by-step process for getting your Virginia dealers license.

Here’s what we’ll cover:

Who needs to get a dealers license in VA?

The Commonwealth of Virginia requires you to get a motor vehicle license if you are engaged in the following activities:

  • Buying, selling, exchanging, or arranging the sale of motor vehicles.
  • Wholly or partly engaged in the business of selling new or used motor vehicles.
  • Offering to sell or displaying vehicles for sale for more than five vehicles in the previous year.

You can learn more about the requirements for auto dealers in the Code of Virginia.

Process of getting a Virginia dealers license

Step 1: Determine license type

Before you apply for a Virginia auto dealer license, you must determine what type of license you need.  

  • Franchise dealer license: This license lets the dealer establish franchise agreements with manufacturers and distributors to sell new or used motor vehicles.
  • Independent dealer license: This license lets dealers sell used vehicles only.
  • Motorcycle and trailer dealer license: This license lets dealers sell motorcycles, trailers, travel trailers, and motorhomes.
  • Watercraft dealer license: This license lets dealers sell water vehicles.

Step 2: Get your business location

The next step is to get your permanent place of business and set up the location to meet all the requirements set forth by the MVDB. This includes:

  • Must meet all local zoning requirements
  • Must be an enclosed structure
  • Must have 250 square feet of office space
  • The business location must be open 20 hours per week and the hours must be displayed at the main entrance
  • Must have a parking lot that can fit 10 vehicles
  • Must have a telecommunications line with a publicly listed number

Step 3: Complete the pre-licensing course and exam

Auto dealers must complete a pre-licensing training course and pass a knowledge test. The classes are run by the Virginia Independent Automobile Dealers Association and the Virginia Community College System.

Unlike most states, the classes take place in-person instead of online. They take place over a two-day period at different locations across the state. There is a $375 registration fee to sign up for the course. If you register more than two weeks in advance, the fee is reduced to $325.

After you finish the class, you’ll need to pass the Dealer-Operator test administered by the DMV. You can take the test at your local DMV service center.

Step 4: Register your business

If your car dealership business is structured as a limited liability company (LLC) or a corporation, you must register your business with the Virginia State Corporation Commission. The Commission will require you to provide your Federal Employee Identification Number (FEIN). You can get yours online through the IRS website.

Step 5: Get general liability insurance

Virginia auto dealers must obtain garage liability insurance coverage for each of their dealer plates. The insurance coverage helps protect the dealer against the cost of bodily injury damage or property damage suffered by third parties during business operations.

Step 6: Get a surety bond

The MVDB requires all dealers to get a Virginia surety bond before applying for a license. The bond helps provide financial protection to consumers and the state for any damages resulting from the dealer’s negligence.

The required bond amount for Virginia motor vehicle dealer bonds is $50,000. Dealers are only responsible for paying a small percentage of the total amount as a premium. This premium typically ranges from 1% to 3%. The surety company issuing the bond determines premiums on an individual basis. When underwriting your bond, they will evaluate your industry experience, credit score, financial standing, and other factors.

Your best choice is to go with a trusted surety like EZ Surety Bonds that can issue your bond quickly and at an affordable rate.

Step 7: Submit application

Once you’ve met all the licensing requirements, you can complete your license application. All the application forms are available on the MVDB website.

Your application needs to include a $225 application fee. You may also need to include additional fees depending on your business:

  • $10 for each extra background check
  • $25 for additional license endorsements
  • $30 for each salesperson license
  • $60 for the first two dealer plates
  • $26 for additional dealer plates

Dealers that have been in business for less than three years may also need to pay $350 towards the Motor Vehicle Transaction Recovery Fund.

You can mail your application packet to your local DMV service center or the DMV headquarters located at the following address:

Virginia Department of Motor Vehicles
P.O. Box 27412
Richmond, VA 23269

Pass the business location inspection

Once the MVDB approves your application, they will contact you to set up an inspection of your business location. If your place of business meets the requirements, they will then issue your Virginia dealers license.

Virginia Dealers license frequently asked questions

How do you renew a Virginia dealership license?

Virginia dealers licenses are valid for either a one or two-year period. You will receive a renewal packet 45 days prior to your license expiration date. You must complete the attached forms and mail them back to the MVDB at the following address:

Virginia MVDB
2201 W Broad St #104
Richmond VA, 23220

How much is a dealer license in Virginia?

Auto dealers in Virginia must pay a $225 application fee and a $325 registration fee for the knowledge exam. Depending on your business needs, you may also need to pay additional fees including:

  • $10 for each extra background check
  • $25 for additional license endorsements
  • $30 for each salesperson license
  • $60 for the first two dealer plates
  • $26 for additional dealer plates

How many cars can you sell in VA without a dealers license?

Car dealers in Virginia can sell up to four motor vehicles a year without a dealers license. If you plan to sell five or more vehicles, you’ll need to get licensed.

How EZ Surety Bonds can help with a Virginia dealers license

When you’re ready to get your Virginia dealers license, EZ Surety can offer you a free online quote for your Virginia auto dealer bond.

We provide competitive premiums and quick turnarounds for individuals of all financial standings. Get in touch today to learn more.