Background

• A dealer license will enable you to engage in the buying and selling of vehicles within your state. Sure, as a private party you can do the same, but with a dealer license you can participate in private wholesale dealer auctions, purchase used cars with closed bids, enjoy important tax benefits, receive dealer discounts and position yourself for the next step up: becoming an automotive broker.
  
  

Research

• Visit your state's DMV site to learn what the requirements are particular to your state. Training, background tests, fees and even dealer recommendations can weigh in. If you plan on setting up a business, you'll need to comply with local and state taxing and planning requirements, too.
  
  

Essentials

• Expect to fill out numerous forms, each detailing the nature of your business. You'll be asked to supply a legal address for your business; put up a surety bond; pay licensing fees including for a separate business license; supply a copy of a lease for the building you are renting; submit corporate papers; obtain a sales tax number; contact the Internal Revenue Service for an employee identification number; and submit fingerprints. If you are operating as a franchise dealer, additional requirements may apply.
  
  

Training

• A number of independent training schools (or classes) have risen up to help prospective used car dealers prepare to become dealers. These classes may be particularly useful when a dealer licensing test is required by the state. Some states require owners to have full understanding of laws and procedures for operating a used car business and test accordingly.
  
  

Miscellaneous

• Not related directly to obtaining a dealer license, but worth noting is financing. If you plan to establish a used car lot, you'll need to be adequately capitalized first. Ensure that funding is in place before beginning the lengthy and time consuming dealer license process.