How to get a used car dealer license in Michigan

This guide is informational and does not replace official Michigan requirements. Always verify with Michigan Department of State — Business Licensing Section before applying.

Step-by-step process

1. 1

   Attend the pre-licensing dealer training

   Michigan law (PA 420 of 2018) requires every applicant, partner, or officer on a new Class B application to complete the pre-licensure dealer training in the 6 months before the application date. The Department of State runs it on Microsoft Teams at no cost. To sign up, email blrd@michigan.gov with the date you want, every attendee's name, email, and phone, and the dealership name and address. You list each person's training date on the application.

2. 2

   Set up a location that meets the established place of business rules

   A Class B dealer needs a permanently enclosed building you own, lease, or rent — not a residence, tent, or temporary stand. Inside: an office of at least 150 sq ft with standard furniture, working utilities, a working restroom, and a working phone (a cell phone is fine) in the business name. Outside: at least 1,300 sq ft to display 10 vehicles, plus 650 sq ft of customer parking, surfaced and lit during business hours. Add a permanent exterior sign with the dealership name visible from the road, and post hours of at least 30 a week. You can't combine space with another dealer to meet the minimums.

3. 3

   Get zoning and municipal sign-off

   Your local zoning authority and your municipality each complete a form in the application packet. Both must be signed within 90 days of when the state receives your application. In Detroit, the forms go through the Department of Buildings and Safety Engineering, Zoning Division, and only forms with the city seal are accepted.

4. 4

   Line up servicing, insurance, and the bond

   Register your own repair facility or sign the packet's Servicing Repair Facility Agreement with a registered facility within 10 miles. This applies even if you sell everything as-is or wholesale. Get 20/40/10 fleet-type Michigan no-fault insurance showing "any vehicle" or "all owned vehicles" on an ACORD 25 in the exact business name. Then get the $25,000 surety bond from a surety authorized in Michigan, executed by a Michigan-licensed agent.

5. 5

   Complete the Original Vehicle Dealer License Application

   Fill out form AR-0032 from the application packet. Include the zoning and municipal forms, the designated branch office selection (up to three Secretary of State branches where you'll submit transactions), your business formation or assumed name filing, the repair facility registration or agreement, the ACORD 25, the original bond, and a check or money order to the State of Michigan for $160 plus $10 per dealer plate. Class B dealers must buy at least two plates. Mail it to the Business Licensing Section in Lansing or apply online. A business email address is required.

6. 6

   Complete fingerprinting when instructed

   After the state receives your application, it sends the form and instructions for the background check, which includes fingerprints. Don't get fingerprinted before those instructions arrive. Everyone listed as an owner, partner, officer, member, or director needs fingerprints on file.

7. 7

   Pass the pre-license inspection

   The Department of State inspects the business location before issuing the license. The Department says dealer applications can take up to 30 days to process, and missing documents delay them. Once you're licensed, a designated person must attend continuing education dealer training within 90 days of the issue date.

Can you get a Michigan dealer license without a lot?

Not for retail. A Class B dealer needs at least 1,300 sq ft to display 10 vehicles, plus 650 sq ft of customer parking, at the licensed address. A residence doesn't qualify, and two dealers can't pool space to meet the minimums.

A Class W wholesaler skips the display lot. In fact, the wholesaler's premises can't be used to display vehicles at all, though it can store vehicles you've bought before you sell them to a dealer. You still need a real office: a permanently enclosed building (not a commercial mailbox), an office at least 8 feet by 8 feet with a door and four rigid walls, working utilities and a phone in the business name, a working restroom, a desk and a locking filing cabinet, and an exterior sign. Post at least 15 business hours a week between 8 a.m. and 5 p.m., Monday through Friday. The location can't be within 200 feet of another licensed wholesaler.

So the honest answer: if you only want to sell to other dealers, Class W works without a lot. If you want to sell to the public, you need the Class B lot.

Buying at dealer-only auctions with a Michigan license

A lot of people want a dealer license so they can buy at dealer-only auctions. A Class B or Class W license is what those auctions are built around, but each auction sets its own registration paperwork, so ask the auction what it needs before you plan around it.

Michigan has three rules worth knowing. A broker (Class D) can't buy vehicles at auctions. A Class W wholesaler can only resell to licensed dealers, so if you plan to retail what you buy, you need Class B. And only a licensed Salvage Vehicle Agent can buy salvage or scrap titled vehicles at an auction.

Michigan also keeps licenses for working dealers. The Department of State won't renew a dealer license if the licensee didn't buy or sell more than 5 vehicles in the 12 months before renewal. A license used only for occasional auction access is at risk.

Once you're licensed: the paperwork on every deal

When you sell to a non-dealer, you must apply for title and registration on the buyer's behalf within 21 days of delivery, using the Michigan Application for Title and Registration (RD-108). Give the buyer a copy of every document they sign, including the RD-108 and the front and back of the title.

Our Michigan RD-108 guide walks through the form field by field. DealerVLO fills a print-ready RD-108 worksheet from the deal — buyer, vehicle, price, and trade — so you're not retyping it at the branch. It's a worksheet, not the official state form.

Unless the vehicle is exempt, the seller completes the odometer statement on the title before the sale is final. For Michigan's separate odometer statement and when you need it, see our Michigan BDVR-108 guide, and our odometer disclosure guide for when a written mileage statement is required.

The Michigan auto dealer bond: $25,000

Michigan requires every used-vehicle dealer to post a $25,000 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.

Class A, B, and D dealers must file a $25,000 bond on Michigan's Uniform Vehicle Dealer Surety Bond form (Classes C, E, F, G, R, and W are exempt). It covers buyers, sellers, lenders, and government agencies for losses from fraud, cheating, or misrepresentation, plus sales and use tax deficiencies. The surety pays only after a court judgment or a final Department of State order. A paid claim reduces your coverage below the required $25,000, and you can only do business while a $25,000 bond is in effect. The premium range is a market estimate, not a state figure.

Common questions