How to get a used car dealer license in Alabama

This guide is informational and does not replace official Alabama requirements. Always verify with the Alabama Department of Revenue, Motor Vehicle Division before applying.

Step-by-step process

1. 1

   Lease a location that qualifies

   Alabama wants a permanent location: a building or structure you own, rent or lease, used as your office, with a working phone listed under the business name. It must be zoned for business, have posted hours and an area for display. Shared tenant space, cubicles and virtual offices don't count. You don't have to be an Alabama resident, but you must have an established place of business in the state.

2. 2

   Put up the sign and take the photo

   Your sign must show the name you're licensed under and identify the place as a car dealer, with letters at least 6 inches high. It must be readable from the street in front of the display area or from 50 yards, whichever is greater. You'll upload a photo of the dealership and sign clear enough to read every letter.

3. 3

   Get the bond, insurance and tax number

   Line up a $50,000 continuous surety bond and blanket liability insurance of at least $25,000/$50,000 bodily injury and $25,000 property damage, or a $75,000 combined single limit. ALDOR's bond and insurance forms are only available inside the license application. You also need a state sales tax number for the application.

4. 4

   Apply online through MyDMV

   File through Alabama Partner Registration in MyDMV and pay the $125 master dealer fee, plus $5 for each extra location. You'll list every owner, partner, member and officer, and upload copies of their IDs. After you submit, MyDMV gives you a transmittal sheet listing the documents to send ALDOR. You can't apply in person.

5. 5

   Get approved and print your license

   ALDOR says processing takes about 3 to 5 business days after it receives your documents. It may ask for more information. When approved you get an email, and you print the license from MyDMV. It isn't mailed.

6. 6

   Buy the county privilege license, then plates

   Buy your privilege license at the county licensing office (Code of Ala. 40-12-51, 40-12-62 or 40-12-169). ALDOR says plates are requested through MyDMV after you have the dealer license and privilege licenses. Every dealer must also become a designated agent of ALDOR. Your dealer bond covers that bond requirement.

Can you get an Alabama dealer license without a lot?

No. ALDOR's application rule says each location must have an area designated as display space for your inventory, along with business zoning, posted hours and a sign you photograph for the application. A used dealer's license already includes wholesale, and the rule doesn't carve wholesale out of these location requirements.

The location also has to be real. Code of Ala. 40-12-390(10) calls a permanent location a building or structure used as an office to receive mail, keep records and conduct routine business, with an operable phone listed under the business name. The rule excludes shared tenant space, cubicles, space rented by the hour or day, and temporary, virtual or rotating offices.

ALDOR does check. In a 2012 case, it revoked a dealer license after an officer found another business at the address. The license was reinstated on appeal, but the order said the department could keep checking whether the dealer was actually operating there.

Using your Alabama dealer license at car auctions

Dealer-only auctions are why a lot of people look into a license. A master dealer license lets you buy and sell as a dealer, including wholesale. Each auction sets its own registration rules, so ask what it needs before your first sale. Expect to show your license.

Your dealer transit plates are for moving inventory, which covers hauling auction buys home. Dealer plates can't go on rental vehicles, tow trucks or service vehicles. Misuse costs $200 for a first violation and $500 after that (Code of Ala. 40-12-264).

The license follows the volume. Sell five or more vehicles at retail in a calendar year that weren't titled in your name and you're a used dealer. Violating the dealer license law is a Class A misdemeanor.

Once you're licensed: your first Alabama deals

As a designated agent, you start title applications through ALDOR's online system. The MVT 5-1E is the title application, and the MVT 5-13 power of attorney lets someone sign for the owner. Every titled sale also needs the federal odometer disclosure.

DealerVLO turns the deal you've already entered into a print-ready MVT 5-1E worksheet, so the buyer, VIN and mileage are in one place when you key the title. Walkthroughs: how to fill out the MVT 5-1E, the MVT 5-13 power of attorney and the odometer disclosure statement.

• Dealer plates are $25 each. Used dealers can hold 10, plus 25 more if you filed 300 or more Alabama title applications last license year.
• Prospective buyers can drive on your dealer plates for up to 72 hours.
• Moving? Update MyDMV, send a new insurance certificate and proof of power, and retail dealers send new location and sign photos.

The Alabama auto dealer bond: $50,000

Alabama requires every used-vehicle dealer to post a $50,000 surety bond. The bond protects buyers from misconduct (odometer fraud, undisclosed liens, deceptive trade practices) and the state from unpaid taxes.

You don't pay the full bond amount up front — you pay an annual premium to a surety company, typically 1-7% (industry estimate) of the bond's face value. Your actual premium depends on personal credit and business history.

ALDOR requires every licensee to file a continuous $50,000 bond (Code of Ala. 40-12-398). The current bond form (MVT 4-3) covers periods beginning on or after October 1, 2020. It also satisfies the designated-agent bond, so you don't buy a second one. Separately, you must carry blanket liability insurance. Letting that lapse carries a $5,000 civil penalty (Code of Ala. 40-12-264). The 1–7% premium range is our estimate, not a state figure.

Common questions