There are 6 high level steps you must complete to get your Alabama vehicle dealer license and this short post will help explain each of these steps.
Some are obvious, some have small and important details, and some might be new concepts to you if this is the first time you're getting licensed in Alabama.
Understanding Being a Designated Agent
The Alabama Department of Revenue considers a holder of an occupational license a designated agent.
This is important because when your application is approved, you will have to go through a Designated Agent Training course.
Plus understanding that all professionals issued licenses by the Department of Revenue are considered Designated Agents. The bonding requirement is referred to as a Designated Agent bonding requirement. Most occupational licenses have to get a surety bond and as a vehicle dealer, you do too.
What is the Designated Agent Bonding Requirement?
Every licensed dealer in Alabama is required to purchase a surety bond in the amount of $50,000 before a license application can be approved.
A surety bond is a legal contract you purchase as a guarantee that you won't commit fraud against your customers.
Think of the surety bond as an agreement of trust between two parties who have never worked together before.
Here are the license classifications, just to make sure we're on the same page:
- New vehicle dealers
- Used vehicle dealers
- Rebuilders
- Wholesale dealers
The only "dealer" that is not required to purchase a surety bond is a trailer dealer selling trailers that are not required to get titled.
Read the details of the $50,000 Alabama auto dealer surety bond and request your pricing.
What Are The Alabama Auto Dealer General Liability Insurance Requirements?
Here are the minimum required liability insurance amounts:
- $25,000 bodily injury/person/accident
- $50,000 combined bodily injury/accident
- $25,000 property damage/accident or combined single limit of $75,000 accident
Just to highlight, here's the difference between a surety bond and liability insurance.
Liability insurance is purchased to protect your business for customer accidents that happen on your business property.
Alabama sets a minimum amount to ensure that businesses they issued licenses to are protected so they don't have to shut down causing supply disruptions to Alabama residents.
The surety bond is also insurance but it's the only type that is purchased for the protection of another party. Again, this is to prevent purposeful fraud by a service provider.
What Are the Alabama Vehicle Dealer Plate Rules?
Dealer plates are used for a variety of reasons by a dealer and here's how they are distributed by the Department of Revenue.`
- New vehicle dealers can get up to 35 dealer and motorcycle dealer plates combined
- Used dealer can only get up to 5 dealer plates (total or combined across vehicle types)
- Licensed new and used dealers can get an additional 25 plates as long as they complete applications for certificates of title for 300 or more title transfers in the state from the previous year
While not relevant for this post, manufacturers have no limitations.
What Are the Alabama Vehicle Dealer Property Requirements?
You must provide photos with your application, primarily of the sign, but be ready to show proof for any of these requirements.
What Are The Dealership Sign Requirements?
- The sign must include the name of the dealership as represented on the application
- The name must be obvious that your business is in the vehicle dealer industry
- The letter on the sign must be a minimum of 6 inches tall
- The sign must be readable from the street that is closest to the display lot or at a distance of 50 yards whichever is the greater distance
- Unlike many states, the sign can be permanent, free standing, or attached a physical structure
What Are Other Dealership Property Requirements?
The Alabama Department of Revenue does not list an official dealership inspection before a license can be issued. However, your dealership must always be available for an inspection at the commissioners discretion.
Here are the property requirements:
- The property must be zoned for commercial use
- You must provide the deed, prove of mortgage payment or a lease
- The property can't be shared with other tenants
- Only one licensed dealer per location
- No space on the property or in any building can be rented out by you
- No temporary office spaces and no cubicles
- Dealership days and hours of operation must be prominently displayed
- There must be adequate space used for displaying vehicles
All dealer license renewals expire on October 1st each year.
In many cases the bond expires along with the license. However in Alabama your auto dealer surety bond will expire on a 12 month period from when you purchase your bond.
When You're Ready to Complete Your Auto Dealer Bond Requirement We're Ready To Help
These are the major requirements you must meet to have your Alabama vehicle dealer license issued.
You can see these are not complex, but as always, the details matter.
When you're ready to purchase your vehicle dealer surety bond and get that requirement completed, we can help:
- Get you the custom pricing you need
- Help you get your bond filled out correctly
- And have your completed bond emailed to you
The entire application for your Alabama dealer license will be submitted electronically. This is why we're able to email you the surety bond.
If you have any questions please call us at 1-800-608-9950. You can also start the pricing process by speaking with a bond specialist or filling out our online quote request form.
