How to get a used car dealer license in Tennessee
A practical walkthrough of the Motor Vehicle Dealer application — fees, bond, timeline, and what to expect at each step. Verified against the official agency as of June 2026.
Getting a Motor Vehicle Dealer used-car dealer license in Tennessee:
- Surety bond required
- $50,000
- Application fee
- $600 (initial application)
- License term
- Annual (bond issued for two years)
- Typical timeline
- 4 – 8 weeks
- Typical first-year cost
- $1,500 – $4,000
This guide is informational and does not replace official Tennessee requirements. Always verify with the Tennessee Motor Vehicle Commission (TMVC) before applying.
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Who can apply for a Motor Vehicle Dealer license
Tennessee requires a Motor Vehicle Dealer license for anyone who sells five or more vehicles in a 12-month period. It's issued by the Tennessee Motor Vehicle Commission (TMVC), which licenses and regulates dealers statewide.
In Tennessee this is also commonly called an auto dealer license, car dealer license, or motor vehicle dealer license — all the same Motor Vehicle Dealer authority to sell used vehicles.
- An established place of business in Tennessee zoned for vehicle sales, with an office, a display lot, and a permanent sign meeting commission standards
- A $50,000 motor vehicle dealer surety bond, issued for two consecutive years
- Garage liability or general liability insurance with at least $300,000 in coverage
- A registered Tennessee business entity and sales-tax registration
- A background check for the applicant and owners
- A passing inspection of the dealership location
Step-by-step process
- 1
Secure a compliant location
Get a Tennessee location zoned for vehicle sales with an office, a display lot, and a permanent sign showing your business name. The commission inspects the site before licensing.
- 2
Register your business and sales tax
Form your Tennessee entity and register for sales tax so you can collect and remit tax on vehicle sales. You'll reference these on the application.
- 3
Post your $50,000 surety bond
Buy a $50,000 motor vehicle dealer surety bond issued for two consecutive years, and keep it active the entire time you're licensed. You pay a premium, not the full amount.
- 4
Get liability insurance
Obtain garage or general liability insurance with at least $300,000 in coverage on the dealership. Tennessee requires this in addition to the bond.
- 5
Submit the application and $600 fee
File the motor vehicle dealer application with the TMVC, pay the $600 initial application fee, and include your bond, insurance, business documents, and location details. Owners submit to a background check.
- 6
Pass inspection and receive your license and plates
A commission representative inspects your dealership to confirm the office, lot, and signage meet requirements. Once approved, you're a licensed Tennessee motor vehicle dealer and can obtain dealer plates.
Tennessee dealer license cost — fees breakdown
| Item | Amount |
|---|---|
Initial application fee | $600 |
Surety bond premium (annual) Premium on the $50,000 bond, by credit. | $250 – $1,500 |
Liability insurance Minimum $300,000 coverage on the location. | Varies |
Dealer plates Obtained after licensing. | Varies |
Business + sales-tax registration Tennessee entity filing and tax registration. | Varies |
Surety bond requirement
Tennessee 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 1-5%of the bond's face value. Your actual premium depends on personal credit and business history.
Tennessee requires a $50,000 motor vehicle dealer surety bond, issued for two consecutive years and kept active for as long as your license is in force. You pay an annual premium (typically 1–5% of the bond) based on your credit, not the full $50,000.
Renewal
Tennessee motor vehicle dealer licenses renew on the commission's cycle — keep your $50,000 bond (issued in two-year terms), your $300,000 liability insurance, and your location compliant. The TMVC sends renewal information; renew before expiration to keep operating.
Common questions
When do I need a Tennessee dealer license?+
Tennessee treats you as a motor vehicle dealer once you sell five or more vehicles in a 12-month period. Selling at that volume without a license from the Motor Vehicle Commission is illegal.
How much does a Tennessee dealer license cost?+
The initial application fee is $600. Add the surety bond premium (often $250–$1,500/year on the $50,000 bond), your $300,000 liability insurance, and facility costs — most first-year totals land between $1,500 and $4,000.
Does Tennessee require insurance as well as a bond?+
Yes. On top of the $50,000 surety bond, Tennessee requires garage or general liability insurance with at least $300,000 in coverage on the dealership location before it will issue the license.
Do I need a physical lot to get licensed in Tennessee?+
Yes. Tennessee requires an established place of business zoned for vehicle sales, with an office, a display lot, and a permanent sign. The commission inspects the location before issuing the license.
How long does it take to get licensed in Tennessee?+
Most applicants are licensed in about 4 to 8 weeks once the location is ready, the bond and insurance are in place, and the background check clears. Scheduling and passing the inspection is usually the longest step.
How much does a Tennessee dealer license cost?+
Plan for about $1,500 – $4,000 in the first year. That covers the $600 (initial application) application fee and the $50,000 surety bond — you pay an annual premium of roughly 1-5% of the bond, not the full amount — plus business-formation, facility, and dealer-plate costs. See the full fees breakdown above.
How do I get dealer plates in Tennessee?+
Dealer plates are separate from the license itself. Once your Motor Vehicle Dealer license is approved, you apply for dealer plates and pay a per-plate fee (listed in the fees breakdown above). You can't obtain dealer plates before the license is issued.
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