How to get an Auto Dealer License in Wisconsin

What is an auto dealer license in Wisconsin?

An auto dealer license in Wisconsin refers to the authorization granted to individuals or businesses that want to sell or lease more than five motor vehicles as a dealer. It is issued by the Wisconsin Department of Transportation (WisDOT), specifically the Division of Motor Vehicles (DMV).

Obtaining an auto dealer license is a legal requirement in Wisconsin for anyone selling vehicles, including new and used cars, trucks, motorcycles, trailers, and recreational vehicles. The license ensures dealers operate within the state's regulations and consumer protection laws. As previously mentioned, the license is required if you sell more than five vehicles in a given year. 

Here are the steps required to apply for an auto dealer license in Wisconsin.

Step 1: Determine the correct type of license for you

Wisconsin offers two types of auto dealer licenses that each serve different purposes. Therefore, you must first decide what license suits you to become a licensed dealer. Here are the two different licenses you can get.

• Retail dealer license: These dealers sell vehicles to the public
• Wholesale dealer license: These dealers sell vehicles to other dealers
• Manufacturer License: A manufacturer license permits a dealer to produce, assemble, or create goods on a commercial scale.
• Salesperson License: A salesperson license is issued to individuals employed by auto dealerships to sell vehicles to customers.
• Buyer's License: A buyer's license allows a dealer to purchase vehicles from auctions or other dealers for the purpose of reselling them to retail customers or other dealers.
• Moped Dealer License: A moped dealer license authorizes a dealer to sell mopeds, which are small, lightweight vehicles with low-powered engines.
• Motorcycle Dealer License: A motorcycle dealer license allows a dealer to sell motorcycles, which are two-wheeled motor vehicles designed for on-road use.
• Recreational Vehicle Dealer License: A recreational vehicle dealer license permits a dealer to sell recreational vehicles, such as motorhomes, campers, and travel trailers, designed for leisure and travel.
• Representative License: A representative license allows an individual to act as a sales representative on behalf of an auto dealership, facilitating customer interactions and promoting vehicle sales.
• Salvage Buyer ID (BID) Card: A salvage buyer ID card is necessary for dealers buying salvage vehicles, typically for repair, resale of parts, or rebuilding.
• Salvage Dealer License: A salvage dealer license allows a dealer to buy, sell, and rebuild salvage vehicles that have been damaged, declared total loss, or recovered from theft.
• Wholesale Auction Dealer License: A wholesale auction dealer license permits a dealer to participate in auto auctions as a wholesaler, buying vehicles for resale to other dealers or entities.

Step 2: Set up a permanent business location

To become a licensed auto dealer in Wisconsin, one of the essential requirements is establishing a permanent business location that is not a residence. This location should fulfill the following requirements: 

• This location should have dedicated office space to conduct business operations efficiently and professionally. 
• A designated display area, measuring at least 12 x 20 feet, for showcasing vehicles available for sale.
• If the dealership focuses solely on motorcycles, the display area requirement can be adjusted to accommodate three motorcycles for display or repair purposes. 
• You must also set up a display lot next to your business
• It must have a business sign
• Posted hours of operation.

It is vital for aspiring auto dealers to carefully plan and prepare their business locations to meet these requirements before initiating the application process for a retail dealer license. Proper adherence to these guidelines will expedite the licensing process and help build a reputable and successful auto dealership in Wisconsin. 

Step 3: Apply for a salesperson license

Individuals must hold a salesperson license to conduct or approve retail sale contracts at an auto dealership in Wisconsin. You can get the application form here. Each dealership must have at least one licensed salesperson on their team. If someone is applying for a salesperson license and has not been licensed in the past five years, they must pass a written exam.

Applicants can visit any DMV service center to take the exam and bring their completed application form. An examiner will collect an $8 license fee and a $5 exam fee during the exam. The exam station will send the exam results and application to the Wisconsin Department of Transportation (WisDOT). If applicants want to speed up the process, they can include a copy of their receipt from the exam station when submitting their completed dealer license application packet.

The exam will cover vehicle disclosure, purchase contracts, record-keeping, advertising, titling, and registration. You can prepare for this exam using the Wisconsin Department of Transportation (WisDOT) ​Motor Vehicle Salesperson Manual. The exam will take at least 45 minutes, but there is no limit to the number of attempts you can make to pass the exam. However, if you fail the test, you must wait for one day before attempting it again.

Step 4: Get an Auto Dealer Bond

An auto dealer surety bond in Wisconsin is a type of financial guarantee required by the state's Department of Transportation (WisDOT) for individuals or businesses seeking a retail dealer license to operate an auto dealership. The purpose of the surety bond is to protect consumers and ensure that the dealer complies with applicable laws and regulations.

In Wisconsin, you must obtain a $50,000 surety bond. As part of your application, you must complete the dealer bond form. When an auto dealer applies for a surety bond, the bond agency considers several variables, including the dealer's experience, financial status, and credit history. The agency issues a bond quote after analyzing these factors. The premium for the bond is decided by the dealer's estimated level of risk. Dealers with excellent credit and significant experience are frequently awarded a lesser premium, ranging from 1% to 3% of the needed bond amount.

In the case that the dealer fails to act according to his contractual obligations, the clients can file a claim on the bond. WisDOT will then investigate this claim and if they find that the dealer didn’t fulfil his obligations, the surety company that provided the bonded will compensate the client up to the amount of the bond. The surety company will then seek compensation from the dealer. It is super important to conduct your business ethically and according to regulation. 

Step 5: Complete the entity/owner statement

For every individual listed on the dealer license application as an owner, partner, corporate officer, corporation shareholder, association member, or LLC member/manager, you must complete one copy of the Entity/Owner Statement. The entity statement asks about basic information about the owners including the position the role they play in the company.  It also asks about your criminal record as a way of assessing the companies background. It's essential to provide complete and accurate information for each person involved in the dealership to facilitate the application process.

Step 6: Complete the business facilities statement

Next, complete the business facilities statement. The business facilities statement is a document that you fill to acknowledge that your business premises meets all the requirements set in place by WisDOT that we went over in step 2. This statement is needed to ensure compliance with state regulations and to ensure that the business operates in a manner that upholds safety standards. Please provide your business name and address on the form. Check the box next to each item that applies to your location. Remember to sign and date the bottom of the form.

Step 7: Get your lease

If your business operates on a property it doesn't own, you must submit a copy of the lease. The lease should clearly state your business entity's name as the tenant and be valid for the entire two-year licensing period. This documentation is essential to prove that your business has a valid and continuous lease agreement meeting the licensing requirements.

Step 8: Complete your dealer license application

If you have followed all the steps above, you are now ready to complete your Wisconsin Motor Vehicle Dealer Two-Year License Application. When submitting this application, ensure you submit two copies. Here, you will select your intended license type and fill in your personal information as well as your dealership’s information By doing so, you can ensure a smooth and efficient application process. You will also need to compile all the documents you have gathered so far and a few more that we will list below:

• Motor Vehicle Dealer Service Agreement
• Entity/Owner Statement
• Business Facilities Statement
• Dealer Bond
• Salesperson/Representative License Application
• Motor Vehicle Dealer License Application(2 copies)
• Lease for your property

Step 9: Submit your application

Congratulations on making it this far; your application is complete and ready to be submitted to the Wisconsin DMV. You will submit your application by mail to the following address.

Wisconsin Dept. of Transportation
Dealer and Agent Section
PO Box 7909
Madison, WI 53707-7909

In addition to submitting your application, you must pay a two-year $20 fee by check to the Department of Financial Institutions. This fee goes towards processing your dealer license. 

The WisDOT Dealer Section will assess your application for completeness and perform any required background checks. If additional information is needed to finalize your application, you will be contacted via letter or phone. To avoid delays, it's essential to provide all necessary information accurately.

Step 10: Receive your license

Once the review process is complete, you will receive your dealer and salesperson licenses, dealer plates, and a comprehensive resource guide to familiarize you with the rules and regulations governing motor vehicle dealerships. You are now set to become a licensed dealer in Wisconsin. Great work!

Wisconsin Auto Dealer Licensing Fees

Summary

Obtaining an auto dealer license in Wisconsin is crucial for those intending to sell more than five motor vehicles annually. Administered by the Wisconsin Department of Transportation (WisDOT), the license ensures compliance with state regulations and consumer protection laws. The application process involves several key steps, including selecting the appropriate license type (retail or wholesale), establishing a permanent business location with specific display area requirements, applying for a salesperson license and passing an exam, obtaining an auto dealer bond based on financial evaluation, and completing essential paperwork. Following thorough review and background checks, successful applicants receive their licenses, dealer plates, and a comprehensive resource guide to navigating the rules and regulations governing motor vehicle dealerships, allowing them to operate legitimately and confidently in the industry.