How to Become an Auto Dealer in Arizona: A Comprehensive Guide

The Arizona Auto Dealer License (aka a motor vehicle dealer license) is a permit issued by the Arizona Department of Transportation (ADOT) Motor Vehicle Division (MVD) that authorizes individuals or businesses to engage in the sale, purchase, or exchange of motor vehicles as a dealer in Arizona. Anyone that sells more than six vehicles per year must obtain a license. In this article, we will start with the types of licenses you can apply for, the steps you must take to apply, and how to renew your license. 

Who needs the Arizona Auto Dealer License?

In Arizona, individuals or businesses selling, purchasing, or exchanging six or more motor vehicles in any given year must be licensed by the state as an auto dealer. The license is required to operate as a auto dealer in the state legally.

It's important to note that there may be additional requirements and regulations specific to each type of license. These requirements vary per license but generally include proper record-keeping, compliance with consumer protection laws, and adherence to zoning and signage regulations. We will go into more detail about each license type in the next section.

Arizona Dealer License Types

New Auto Dealer

A new auto dealer is an individual or business that buys and sells new and used motor vehicles.

Used Auto Dealer

A used auto dealer is an individual or business that buys and sells seven or more used motor vehicles in a year. 

Wholesale Auto Dealer

A wholesale auto dealer is an individual or business that sells used motor vehicles to licensed auto dealers. 

Public Consignment Auction Dealer

A public consignment auction dealer is an individual or business that conducts live auctions with a licensed auctioneer and provides live auction services to the public as per a consignment contract. A consignment contract is when a "consignor" supplies goods to a "consignee" to sell. In this case, you, the public consignment auction dealer, are the consignee. 

Wholesale Auto Auction Dealer

A wholesale auto auction dealer is an individual or business providing auction services to licensed dealers in wholesale transactions. This type of dealer cannot buy, sell, or own any vehicles that are part of their auction services. They can only sell the vehicles to licensed auction dealers.

Broker

A broker is an individual or business that helps customers find a specific vehicle and assists in purchasing that vehicle for a commission. 

Automotive Recycler

An automotive recycler is an individual or business that obtains vehicles to dismantle, sell, or dispose of their parts. 

Step 1: Sign up for an account on ADOT Force

The first step is to sign up for an account on the ADOT Force website. This account is how you will be able to access the necessary license applications and how you will submit all required materials. Registering on an ADOT Force account is very simple. All you need is your first and last name and a password to complete your registration.  

You will find the dealer license application once you have logged into your account. The Arizona Motor Vehicle Division will also make an account for your organization. You can also pay for application-related fees once logged in. 

Step 2: Choose a license type

The second step is to decide what dealer license type to apply for. The Arizona dealer application provides seven options:

• New Auto Dealer
• Used Auto Dealer
• Wholesale Auto Dealer
• Wholesale Motor Vehicle Auction Dealer
• Broker
• Automotive Recycler
• Public Consignment Auction Dealer

We cover what each license type does above. 

Step 3: Pick a business type 

The third step is to figure out what business type your business is. Arizona requires all license holders to operate as legal entities. Registering your business allows the state government to recognize your business as a legal entity. Arizona provides seven options for you to choose from:

• Individual
• Partnership
• Corporation
• Limited Liability Company (LLC)
• Limited Liability Partnership (LLP)

Arizona auto dealers are most commonly either sole proprietors, LLCs, LPs, or for-profit corporations. A sole proprietorship can also be sometimes called an "individual." Operating as an individual is the easiest for solo dealers since registering as a sole proprietor requires the least paperwork. However, as an individual/sole proprietor, you are not protected from your business's liabilities and taxes. 

LLCs/LLPs are suitable for you if you wish to separate the liabilities of running a business from the owners of your business. 

On the other hand, for-profit corporations are suitable for dealers who wish to raise outside capital for their dealership. 

Step 4: Register your business

After choosing your business type, you can begin to register your business. Each business type has separate processes for registration.

For sole proprietors, file a trade name with the Arizona Secretary of State for $10. Fill out the Trade Name Registration Application and mail it to:

Secretary of State
Attn: Trade Name/Trademark
1700 W. Washington St., Fl. 7
Phoenix, AZ 85007-2808

Once this is done, you can apply for an EIN through the IRS. This is an optional step if you are a sole proprietor without employees. However, having an EIN may make it easier to get a bank account since some banks require an EIN to start a business bank account. 

For LPs, file your Certificate of Limited Partnership and Qualification to be a Limited Partnership to:

Secretary of State
Attn: Limited Partnerships
1700 W. Washington St., Fl. 7
Phoenix, AZ 85007-2808

Corporations and LLCs must file Articles of Incorporation to:

Arizona Corporation Commission
1300 W. Washington St.
Phoenix, Arizona 85007

If you are a nonprofit corporation, submit the Articles of Incorporation for nonprofit corporations. If you are a for-profit corporation or an LLC, submit the Articles of Incorporation for for-profit or professional corporations. This can be done via physical mail to the address above, or online via the Arizona Corporation Commission website.

Step 5: Establish a business location

All licensed auto dealers, with the exception of wholesale dealers, are required to have a valid and permanent business location. 

The next step is to establish a location for your business. The following requirements apply to all licenses except wholesale dealers:

• Your place of business must be in a permanently enclosed building with enough space to display two or more vehicles.
• You will also need a business sign that is legible from 300 feet away during daylight.
• The building you are operating in is devoted principally to the dealership business.

Step 6: Obtain an Arizona Auto Dealer Bond

The fifth step is to obtain the Arizona auto dealer bond. This bond is required for all licenses. Below is a chart of required bond amounts for each license:

What is the Arizona Auto Dealer Bond?

Motor vehicle dealer bonds/auto dealer bonds are required to guarantee that the auto dealers will fulfill their legal obligations to the state of Arizona and their professional obligations to their clients. The surety bond serves as financial protection for auto dealers' customers. For example, suppose a dealer sells a car without a valid title. In that case, the consumer is entitled to make a claim against the dealer's auto dealer bond. 

How to get the Arizona Auto Dealer Bond

SuretyNow offers a convenient solution for obtaining your Arizona auto dealer bond. First, fill out our 3-minute form, and we will get back to you within the hour. You will receive your bond via email or mail. 

Step 7: Apply for the Transaction Privilege Tax license

The Transaction Privilege Tax (TPT) license is a tax on dealers for the privilege of doing business in Arizona. This license is required for all dealers. There are three ways to apply for a TPT license:

Online: Set up an account on AZTaxes.gov. Here are the instructions on how to create an account. You will typically receive your license certificate in the mail 7-10 business days after submitting your application. 

Mail: Download and complete the Joint Tax Application for a TPT License and mail it to the following address:

Arizona Department of Revenue
PO Box 29032
Phoenix, AZ 85038-9032

It will typically take two weeks to receive your license.

In-person: Go to one of the following offices to deliver your completed application in person:

Phoenix Office:

1600 W. Monroe
Phoenix, AZ 85007

Mesa Office:

55 N. Center
Mesa, AZ 85201

Tucson Office:

400 W. Congress
Tucson, AZ 85701

If you submit your materials in person, you will usually receive your license the same day you submit your application.

Step 8: Get fingerprinted and provide background information

Fingerprinting is required for owners with at least a 20% stake in the business. To get fingerprinted, create an account with the Arizona Applicant Processing Services. After creating your account, follow the steps listed below:

1. Click the “Sign Up” link
2. The website will then make you choose what type of account you want to create. Choose “Background check for employment/licensure.”
3. Click “YES” for the next question.
4. On the next page, choose “Individual.”
5. Complete the required fields.
6. Verify your email address.
7. Enter your fingerprint code. As a licensed dealer applicant, enter the code VDR-059.A.
8. Once you’ve entered your code, the website will take you to the rest of the application. Answer all required questions. You will be asked mostly about your personal information.
9. After completing your application, you will be taken to the “My Order” webpage that asks you to enter your email address. You will then get an email notification requesting you to pay your background fee. Click “Dashboard” on the webpage and scroll down to “My Background Checks.” You will see your name and a checkbox. Clicking on the checkbox will allow you to select the “Pay” button.
10. After paying for your fingerprinting, you will be given further instructions for scheduling an appointment with a fingerprinting agency. 

Step 9: Complete and submit your license application

The next step is to put all these materials together and fill out the ADOT Auto Dealer Application. The following materials are required for the application:

1. $15 check made payable to Motor Vehicle Division (MVD)
2. Fingerprint card(s) submitted in an envelope sealed by the fingerprint technician
3. $22 cheque made payable to the Department of Public Safety (DPS)
4. Authorization to Release Information Statement of Personal History form #46-0407
5. Surety bond and Power of Attorney
6. Copy of your Transaction Privilege Tax License
7. Copy of Articles of Incorporation/Organization or Partnership Agreement (for corporations, partnerships, LLCs, etc.)
8. Photos required on page #3 of the application
9. Manufacturer/Distributor's authorization letter
10. ADOT Dealer Plate Application for new, used, and wholesale auto dealers
11. Authorized Presence document (for individuals and partnerships)
12. Copy of lease agreement/ownership document (for used, broker, public consignment, and automotive recycler)

How to Renew the Arizona Auto Dealer License

To renew an Arizona Auto Dealer License, use your ADOT Force account. The portal will give you detailed instructions on how to renew your license. Typically, the renewal costs $100. Here are the general steps to renew your license:

1. Check Renewal Eligibility: Ensure that your dealership meets all the eligibility criteria for license renewal. Common requirements include maintaining a valid business location, having the necessary insurance coverage, and having no unresolved complaints or disciplinary actions against the dealership.
2. Receive Renewal Notice: The Arizona Department of Transportation usually sends a renewal notice to the mailing address on file at least 45 days before the license expiration date. Make sure your contact information is up-to-date with ADOT.
3. Complete Application: Once you receive the renewal notice, follow the instructions provided to complete the license renewal application. You may need to provide updated business information, proof of insurance, and any other required documentation.
4. Pay Renewal Fee: Submit the required renewal fee with your application. The fee amount will vary depending on the type of dealership and other factors.
5. Inspection: Some dealerships may be subject to inspection as part of the renewal process. Ensure that your business location and records comply with all state regulations.
6. Background Checks: The ADOT may conduct background checks on dealership owners and employees during renewal.
7. Submit Application: Submit the completed application and all required documents and fees to the Arizona Department of Transportation. You can typically do this online through the ADOT website or by mail.
8. Wait for Approval: After submitting your application, wait for the ADOT to process it. The processing time may vary, so applying well before your current license expires is advisable.
9. Receive Renewed License: If your application is approved, you will receive a renewed auto dealer license.