How to get a used car dealer license in Kentucky

This guide is informational and does not replace official Kentucky requirements. Always verify with Kentucky Motor Vehicle Commission before applying.

Step-by-step process

1. 1

   Check your cash and inventory

   Kentucky screens applicants on money. Under 605 KAR 1:030, an applicant for a used dealer license must show at least $50,000 in unencumbered cash or unencumbered vehicle inventory. Between $50,000 and $100,000, you get licensed only if you also post a commercial bond for the difference. At $100,000 or more, no bond is required unless the Commission has reasonable cause to doubt your finances or compliance. Fill out the application's financial statement carefully, attach a bank statement, and list liabilities too. Inventory only counts if it's in the business name or your personal name.

2. 2

   Set up the lot and office

   Find a permanent, enclosed commercial building — the statute says commercial, so a residence can't qualify. The office needs at least 100 sq ft, standard furniture, a phone, electricity, a computer, and a fax machine. It must be underpinned, on a permanent foundation, and on or right next to the lot. The display lot and customer parking needs at least 2,000 sq ft with a hard surface like gravel, asphalt, or concrete, and no vegetation growing through. It's for your vehicles and customers only, with no public through traffic. If another business shares the site, your lot must be separate, and you need your own address and mail receptacle.

3. 3

   Pick a business name and put up the sign

   Your trade name has to include "Used Cars," "Auto Sales," "Auto Mart," or similar wording. You can't use a vehicle make in the name unless you're a franchised new dealer, and you can't use "wholesale" unless you're applying for a wholesale license, or "broker" or "consignment" at all. The sign must use the exact name on your application, assumed name certificate, or articles, with letters at least 9 inches high. It has to be installed before you submit the application.

4. 4

   Complete the TC 98-1 application

   Fill out the Application for Motor Vehicle Dealer License (TC 98-1) and print it one-sided — the Commission returns two-sided copies. Include the financial statement and bank statement, at least six color photos of the premises (605 KAR 1:030), a hand drawing of the office, lot, sign, and nearest road, a personal data form and waiver for each owner or officer, and your articles or assumed name certificate. Mail it with the $175 processing fee and $25 per owner, partner, or officer for the criminal background check, payable to the Kentucky State Treasurer. Both are non-refundable. Incomplete applications are returned.

5. 5

   Meet the meeting deadline and pass the inspection

   The Commission meets on the second Friday of each month. Your complete application must arrive at least 10 working days before the meeting, not counting weekends, holidays, or the meeting day. Call 502-573-1000 for the cutoff date. An inspector visits your location before the meeting, and an unfinished facility can get the application denied. By statute, the Commission must grant or refuse a license within 30 days of a complete application (KRS 190.030).

6. 6

   Pay the license fees and file insurance after approval

   You don't pay the license fee or file insurance before approval. Once approved, the Commission asks for the $200 dealer license fee, $40 for each salesperson license (every owner needs one), and a certificate of garage liability insurance sent by your insurance company, not the agent. Then take the license to your county clerk to get dealer plates and temporary tags.

Can you get a Kentucky dealer license without a lot?

Not usually, and a wholesale license doesn't get you out of it. The Commission's requirements say wholesale applicants meet every requirement except the sign — so a wholesaler still needs the commercial building, the 100 sq ft office, and the 2,000 sq ft hard-surfaced lot.

The statute has one opening. KRS 190.035 says the lot requirement may be waived if the dealer has enough space inside a building to properly show and display the vehicles being sold. That's an indoor showroom, not a home office. The location still has to be a commercial building, open to the public, with a sign visible from the street.

Once licensed, you can sell online and deliver to a customer's home if the customer asks (KRS 190.030). But displaying, selling, or advertising vehicles anywhere other than your licensed location, without an off-site sale or display permit, can cost you the license.

Buying at dealer-only auctions with a Kentucky license

Many people want a dealer license to buy at dealer-only auctions. Those auctions are built around licensed dealers, but each one sets its own registration paperwork, so ask the auction what it needs before you plan around it.

Kentucky adds one rule worth knowing before your first sale. The Commission says anyone purchasing at auction on behalf of a dealer needs a salesperson license, along with anyone driving on dealer plates or doing transfer work at the clerk's office. Every owner has to hold one anyway. A wholesale license works for auction buying, but you can only resell to dealers. To retail what you buy, you need the used dealer license.

Once you're licensed: the paperwork on every deal

Kentucky titles a sale on the TC 96-182, the Application for Kentucky Certificate of Title or Registration, filed with the county clerk. It carries the odometer statement and the notarized buyer-and-seller affidavit that sets the 6% usage tax on the sale price minus trade-in. Our Kentucky TC 96-182 guide walks through it section by section.

DealerVLO fills the official TC 96-182 from the deal — buyer, vehicle, price, and trade. Signatures and the notary blocks stay blank for ink. For when a written mileage statement is required, see our odometer disclosure guide.

Keep your insurance in force. If it's canceled, your right to do business stops right away, and the license is void unless coverage is reinstated within 30 days (KRS 190.033).

The Kentucky auto dealer bond: $0 – $50,000

Kentucky requires every used-vehicle dealer to post a $0 – $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 1–5% (estimate) of the bond's face value. Your actual premium depends on personal credit and business history.

Kentucky doesn't set one bond for every dealer. Under 605 KAR 1:030, an applicant with $100,000 or more in unencumbered cash or vehicle inventory needs no bond, unless the Commission has reasonable cause to doubt their finances or compliance. An applicant with $50,000 to $100,000 must post a commercial bond for the difference. Below $50,000, you don't qualify. KRS 190.030 caps a bond the Commission requires for doubts about financial responsibility at $100,000, executed in the name of the State of Kentucky; it's only paid after a court adjudication. The premium range is a market estimate, not a state figure.

Common questions