Types of Maryland Motor Vehicle Dealer Licenses
Step 1: Establish a business location
Step 2: Obtain all required documents
Step 3: Obtain a Maryland motor vehicle dealer bond
Step 4: Get liability and workers’ compensation insurance
Step 5: Complete the CS-042 license application
Step 6: Complete Dealer Orientation
Step 7: Prepare for a site inspection
Step 8: Submit your application and all required materials
Maryland requires anyone engaging in the selling, buying, exchanging, or manufacturing of motor vehicles to obtain a motor vehicle dealer license. This is sometimes also known as an auto dealer license. In this article, we will first go into the different type of dealer licenses, then how to get the license, and finally, how to renew the license.
Maryland offers thirteen types of licenses related to motor vehicles. Below is a chart of the 6 most common types of dealer licenses and each of their descriptions:
|
License Type |
Description |
|
New Vehicle Dealer |
Sells new vehicles under a franchise agreement* with a licensed manufacturer or distributor |
|
Used Vehicle Dealer |
Sells used vehicles to the public or to other licensed dealers |
|
Wholesale Dealer |
Buys, sells, and exchanges used vehicles to other licensed dealers (including charities that accept donated vehicles) Purchases used vehicles from the public CANNOT sell vehicles to the public |
|
Motorcycle Dealer |
Sells new OR used motorcycles under a franchise agreement* with a licensed manufacturer or distributor |
|
Emergency Vehicle Dealer |
Sells new emergency vehicles under a franchise agreement* with a licensed manufacturer or distributor |
|
Trailer Dealer (Boat, Under 15’, Over 15’) |
Sells new OR used trailers under a franchise agreement* with a licensed manufacturer or distributor |
*A franchise agreement is between a manufacturer or distributor and a dealer. The manufacturer or distributor have their own brands, and the agreement or contract allows the dealer to sell their vehicles and profit off of them.
If the license you need is not on this list, visit the Maryland Motor Vehicle Administration Dealer Information page.
Although there are a variety of dealer license types, all basically require the same application process to obtain the license.
The first step is to establish a business location for your dealership. The Maryland dealer application requires you to specify where your business will be located. Wholesale dealers are exempt from this requirement. After you turn in your initial application, you must pass a site inspection. In your business location, you must have the all of the following:
Your business must also follow these requirements:
The next step is to acquire all required documents. Below is a list of the documents required as well as details of how and why you must complete these forms.
You must get a Federal Tax ID Number, which is also known as a Federal Employer Identification Number (FEIN) or Employer Identification Number (EIN). You must obtain this to register your business because it allows you to pay federal and state taxes, open a business bank account, hire employees, and many more.
To apply, visit IRS website to apply online or call them at 1-800-829-4933.
The next step is to complete a criminal background check. In order to do so, you must fill out the CS-011 form from the Maryland state government site and attach it with your application.
The Zoning Approval form proves to the state of Maryland that your business location follows the laws and regulations of the jurisdictions you are operating in. The zoning form is form CS-053 and can be found in the license application packet.
Go to Maryland Department of Assessments and Taxation and scroll down to “Create or Start a Business in Maryland” to register your business. Maryland requires all businesses to be registered in order to become legal entities. After you’ve registered you must provide proof of the registration. You can do this by either showing your registration form OR a letter from the Department of Assessment and Taxation confirming your registration. The form or letter should be attached with your license application.
The next step is to make sure you have a repair facility. A repair facility is where your dealership’s vehicles will be taken to be repaired. You could either have this repair facility on the premises of your business OR have a contract with one within five miles of your business. If you obtain the contract, you must complete the Repair Facility Contract form (CS-125).
A dealer must contract with an Electronic Registration and Titling (ERT) provider. A copy of this contract is required to be submitted along with your application.
A ERT service provider is an individual or entity that is authorized to submit electronic applications for the Certificate of Title/Registration of a vehicle on behalf of your dealership to the county government you are operating in.
To contract with an ERT provider, contact any of the following:
CVR: 1-800-333-6995
DealerTrack: 1-800-876-2312
Title Tech: 1-866-689-0578
These are all the ERT providers that are contracted with the Maryland MVA.
A trader’s license is required in the state of Maryland to buy and sell goods. To apply for this license make an account on the Maryland Licensing OneStop Portal.
A trader’s license is a legal document that legitimizes your business and allows you to do business in your county.
On the Maryland Licensing OneStop Portal, there are three categories you can browse: professional, organizational, and personal.
Professional is for licenses and permits for individual owners. Organizational is for licenses and permits for businesses with more than one owner, like partnerships, corporations, and more. Personal is for licenses and permits that are not for business use. Choose whichever option best fits your business.
New vehicle dealers must provide verification of franchise agreements from each of their manufacturers. The manufacturers must be licensed under the Maryland Motor Vehicle Administration. Franchise agreements are when a brand owner allows a dealer to receive benefits of selling the brand’s products. For example, if a dealership wanted to sell Toyota vehicles, it would have to enter a franchise agreement with Toyota.
The second step is to obtain the required surety bond. Unlike other states, Maryland’s required bond amount is determined by the number of vehicles sold.
Motor vehicle dealer bonds or auto dealer bonds guarantee that the motor vehicle dealers fulfill their legal obligations to the state of Maryland and their professional obligations to their clients. The surety bond serves as financial protection for motor vehicle 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.
SuretyNow offers a convenient solution for obtaining your Maryland motor vehicle 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.
Below is a table of the bond amount requirements of each dealer license type:
|
Number of Vehicles Sold |
Required Bond Amount |
|
1-500 |
$50,000 |
|
501-1000 |
$75,000 |
|
1001-2500 |
$100,000 |
|
2500+ |
$300,000 |
|
Number of Vehicles Sold |
Required Bond Amount |
|
1-250 |
$15,000 |
|
251-500 |
$25,000 |
|
501-1000 |
$35,000 |
|
1001-2500 |
$50,000 |
|
2500+ |
$150,000 |
|
Number of Vehicles Sold |
Required Bond Amount |
|
1-250 |
$15,000 |
|
251-500 |
$25,000 |
|
501-1000 |
$35,000 |
|
1001-2500 |
$50,000 |
|
2500+ |
$150,000 |
Flat bond amount of $5,000.
Bond amount is $5,000 for under 15', and $15,000 for over 15'.
|
Number of Vehicles Sold |
Required Bond Amount |
|
1-500 |
$50,000 |
|
501-1000 |
$75,000 |
|
1001-2500 |
$100,000 |
|
2500+ |
$300,000 |
|
Number of Vehicles Sold |
Required Bond Amount |
|
1-250 |
$15,000 |
|
251-500 |
$25,000 |
|
501-1000 |
$35,000 |
|
1001-2500 |
$50,000 |
|
2500+ |
$150,000 |
|
Number of Vehicles Sold |
Required Bond Amount |
|
1-500 |
$50,000 |
|
501-1000 |
$75,000 |
|
1001-2500 |
$100,000 |
|
2500+ |
$300,000 |
|
Number of Vehicles Sold |
Required Bond Amount |
|
1-250 |
$15,000 |
|
251-500 |
$25,000 |
|
501-1000 |
$35,000 |
|
1001-2500 |
$50,000 |
|
2500+ |
$150,000 |
The next step is to come up with liability and workers’ compensation insurance policy with your insurance company. Once you’ve come up with a policy, sign a Certificate of Insurance and submit it along with your application.
Liability insurance gurantees your financial protection if a client or client’s property is hurt on your business premises or in your motor vehicle. Insurance companies like NEXT Insurance offer this type of coverage.
Workers’ compensation insurance provides medical and wage benefits to your employees if they are injured or become ill at work. This insurance allows the insurance company to pay the medical expenses, so the burden does not fall on your company. You can obtain this insurance at SuretyNow by filling out a quick 3-minute application.
The fourth step is to fill out the Maryland Vehicle Dealers License (CS-042) application. The application asks for the following information:
The next step is to complete Dealer Orientation. Dealer orientations teach new dealers the essentials of operating a dealership. You only have to go to one session to fulfill the requirement. Orientations are held monthly from 9am to 1pm by the Maryland Motor Vehicle Administration. If you cannot attend the orientation you signed up for or have any questions, you can contact the office at 410-787-2952 or email MVABLDISD@MDOT.MARYLAND.GOV to reschedule.
In 2023, the following dates are available for Dealer Orientation:
These sessions are conducted virtually through Microsoft Teams. You must use a computer with an operating camera and microphone, so you can hear and view the presentation. The presentation material will be available to you after the session.
To sign up for an orientation session, email Toria Cobb, tcobb@mdot.maryland.gov or Donnell Reeves, dreeves@mdot.maryland.gov.
Before you submit your application, you must contact Maryland MVA to conduct a business site inspection. To set up an appointment, call MVA Investigation Division at 410-787-2952. To check if you have fulfilled all site requirements, refer back to Step 1: Establish a Business Location.
Once the inspection is complete, the investigator will pass or fail your business. If you have passed, the investigator will sign your application and issue you a Business Site Inspection Receipt. The receipt must submitted with your license application.
Submit your applications either electronically or via mail.
To submit it electronically, you will need the e-Services business portal:
To submit it via mail, send all of your materials to the following address:
MDOT MVA
Business Licensing Room 146
6601 Ritchie Highway, NE
Glen Burnie, Maryland 21062
The state of Maryland also provides 7 licenses related to motor vehicles that are for dealerships. Although these are considered motor vehicle licenses, they are different from dealer licenses. These licenses do not permit you to open a dealership or sell motor vehicles.
Transports Maryland Motor Vehicle Administration (MVA) documents and fees to and from MVA offices for customers
Constructs new vehicles in the United States (does not have to be located in Maryland)
Constructs new two-stage vehicles in the United States (does not have to be located in Maryland)
Imports new vehicles manufactured or assembled outside of the United States under a franchise contract with a licensed dealer (does not have to be located in Maryland)
Dismantles, destroys, or scraps vehicles for the sale of their parts and materials
Processes vehicle scrap for re-smelting purposes
Sells vehicles under a licensed vehicle dealer
The Maryland Business Licensing and Compliance division will make a license renewal packet to you about 60 days before your license expires. If you do not receive your packet within that time period, contact the Business Licensing and Compliance division at BusinessLicensing@mdot.state.md.us. Every license expires on December 31st of the current year, so if you do not get your renewal packet between the months October and December, you should consider contacting the Business Licensing and Compliance division.
You must submit all required material at least 15 working days before the expiration date.
To renew your Maryland motor vehicle dealer license, you will need the following materials:
The renewal fees for each type of dealer license are listed below:
