TLDR: A Motor Vehicle Dealer License is essential if you want to sell 5 or more vehicles in a 12-month period in Pennsylvania. It is not an easy process to obtain a motor vehicle dealer license. Below we outline the steps you need to obtain a motor vehicle dealer license.
Any prospective new, used, or motorcycle dealer must be licensed through the Pennsylvania Department of State's State Board of Vehicle Dealers, Manufacturers, and Salespersons. You will need to apply at the State Board of Vehicle Manufacturers, Dealers, and Salespersons through PennDOT and submit a completed dealer application form together with multiple required supporting documents and certificates. You will also need to apply for dealer plates from the Pennsylvania DoT and submit a Pennsylvania auto dealer bond, in addition to meeting other requirements.
This may seem like a daunting task, but we will break it down for you into more clear and manageable steps to make getting a license an easy feat for you.
As listed above, there are five different types of dealer licenses and you need to decide what license you are applying for based on the type of vehicles you are planning to sell.
There are many options for your business: Limited Liability Company (LLC), S Corporations, and Sole Proprietorships. We list the pros and cons of each below:
Limited Liability Corp (LLC)
ProsCons
Maximum amount of flexibility in business operations
A lot of filings and fees to stay compliance and cost
S Corporation
ProsCons
Better for smaller corporations with a max of 100 shareholders
More admin and rules than LLC
Sole Proprietorship
ProsCons
Easiest to get started, meant for solo business owners
Lack of legal distinction between the individual and the business. The owner is the business
Here is a link with more information on each business type.
There are various documents that you will need to complete based on the type of business you decide to register.
PA corporations:
Out-of-state corporations:
PA LLC or Partnerships:
Out-of-state LLC or Partnerships:
The next step will be to get a copy of the Certificate of Occupancy from the [Department of Labor and Industry] (https://www.dli.pa.gov/Pages/default.aspx)(717-787-3806). Alternatively, you can get a copy of the letter of compliance or use and occupancy permit from the city or municipality in which the dealership is located.
You will need to provide two pictures of each of various parts of your dealership below. This requirement serves several purposes such as the verification of your business location and checking if the premises complies with the regulations. The pictures you take should show the following:
Alongside your application, you will be required to provide a recent Criminal History Records Check from the state police or other state agency for every state in which you have lived, worked or completed professional training/studies for the past 5 years. The report(s) must be dated within 180 days of the date the application is submitted.
A franchise agreement is a legal agreement in which the owner of a brand or trademark (the franchisor) permits another party (the franchisee) to operate a business, sell products, or provide services using the franchisor's trademark or brand identity.
If you intend to sell new vehicles, you are required to provide a copy of the franchise agreement for the vehicles to be sold
The next step will involve making a hand-drawn diagram on 8 ½” x 11” paper, indicating the locations of customer parking and dimensions of all buildings, offices and display areas of the dealership and the location of any other businesses or residences located on the premises.
The diagram must show the complete property, labeling everything, including doorways, and must be signed and dated by the applicant.
The dealership must also be a complete and separate entity from any other business or residence.
Example dealership diagram
You will need to provide a copy of a deed if you own the property. If not, you will need to provide a lease agreement showing that the property has been rented for a minimum of 6 months.
If the deed has a location description that does not indicate the address of the property, please submit an affidavit indicating that the location description in the deed is that of the dealership location. The lease must disclose the address of the facility that is being leased.
Next, you will need to get a copy of a telephone bill or letter from the telephone company verifying the installation of a single business landline telephone at the proposed dealership address. The business telephone number should be listed under the dealership's licensed name.
You will need to provide a resume for each owner, partner, officer, or member to establish the reputation in the business of the applicant for the past 5 years. This helps show the credibility of the business.
Finally, you are required to obtain documentation from your local municipality verifying that your business location has proper zoning.
Compile all the documents you have so far which we will list again below, fill out the Initial dealership application online, and pay the application fee of $65.00.
All the owners, officers, partners, and/or members must sign and upload the application certification. The application certification is downloadable in the confirmation after the application is submitted.
After applying, mail the required supporting documents to the following address:
Pennsylvania Department of Transportation
State Board of Vehicle Manufacturers
Dealers and Salespersons
P.O. Box 2649
Harrisburg, PA 17105
After you have applied to the State Board, the board will schedule an inspection of your dealership once it accepts your application. If you pass the inspection, you will receive your Pennsylvania dealer license so that you can start operating your business.
After your application is accepted, the inspector will reach out to you directly to schedule an inspection. Therefore make sure you can access the contacts you provided in your application.
The inspection will confirm that your premises matches the information you provided in your application. A $45.00 re-inspection fee will be charged whenever there is a failed inspection.
Once you have applied for an auto dealer license from the State Board, you will then need to apply at the Pennsylvania DoT for vehicle dealer registration plates. To apply for a dealer plate or plates, you will need to follow a series of steps that we will take you through. The first step is to complete Form MV-349, which is the dealer plate application form.
In Pennsylvania, auto dealers are obligated to obtain and maintain an auto dealer bond worth $20,000 for each of their locations. This bond serves as a safeguard for customers in case the dealer engages in fraudulent activities, misconduct, or violates business regulations and laws. If any violations occur, a customer or the state can file a claim against the bond. The surety company responsible for the bond will then investigate the claim and, if it is valid, compensate the claimant up to the maximum bond amount. However, the dealer is ultimately responsible for reimbursing the surety company for any payouts made. To avoid bond claims, it is crucial for dealers to operate their businesses honestly and in compliance with the law, as a claim can be costly and detrimental to their operations. Losing the bond could result in the revocation of the auto dealer license and cessation of business. It's important to note that an auto dealer bond is a type of surety bond, which functions as credit rather than insurance.
During the application process, the bond agency evaluates factors such as the dealer's experience, financial stability, reputation, and credit. Based on this assessment, the agency offers a bond quote. The premium for the bond depends on the perceived risk associated with the dealer, with those having excellent credit scores and experience being charged a lower premium, typically ranging from 1% to 3% of the required bond amount. This means that a Pennsylvania dealer could pay as little as $220 to $600 for their bond, with the premium required upfront to secure the bond.
You will need to fill out Form MV-375 as proof of bonding for each business location.
If your business is anything other than a sole proprietorship or partnership, you would need to apply for a Federal Employer Identification Number. A federal EIN is a unique nine-digit tax identification number assigned by the Internal Revenue Service (IRS) to identify businesses operating in the United States. It is used for various purposes, including filing federal tax returns, opening business bank accounts, paying payroll taxes, applying for business licenses, etc.
You can apply for a federal employer identification number on the official IRS website. The application can be completed within one session and a Federal EIN will be provided to the applicant upon completion.
If your business is a sole proprietorship or partnership, you can submit the following identification in place of a federal EIN: A state driver’s license/person ID or a valid US passport.
Having an understanding of the Pennsylvania Vehicle Code will help you comply with the. Understanding the specific requirements outlined in Chapters 13, 53 & 43 will help ensure that you operate your dealership per Pennsylvania state law. They include provisions related to licensing, record-keeping, advertising, sales practices, warranties, and other aspects of the dealership business.
After compiling the last batch of documents, which we will list again below for your ease, mail them to the Pennsylvania DoT.
Once your auto dealership passes the inspection, you will be granted a temporary authorization that allows you to begin operating the dealership. Approximately four weeks after receiving the temporary authorization, you can expect to receive your official dealer license and dealer identification number via mail.
Congrats on getting your license! Now the real work starts. But before you do that, sit back, and celebrate.
Congratulations on completing the process to obtain a motor vehicle dealer license in Pennsylvania! It may have been a daunting task, but you've successfully navigated through the required steps. Now that you have your license, you're ready to embark on your journey as a motor vehicle dealer.
If you ever need assistance or information related to the auto dealer bond, SuretyNow is here to help. As a reputable surety agency appointed with multiple insurance carriers, SuretyNow can provide you with affordable rates for a Pennsylvania Motor Vehicle Surety Bond. We understand the importance of maintaining compliance and protecting your customers, and we're here to support you.
The fees associated with getting an auto dealer license in Pennsylvania are straightforward and can be broken down as follows
Upon passing the inspection, you will be granted a temporary authorization, allowing you to commence your dealership operations. Your official dealer license and dealer identification number will be sent to you via mail approximately four weeks after receiving the temporary authorization. Typically, the entire process, from initiation to completion, should be completed within six months or less.
You can buy a Pennsylvania Motor Vehicle Surety Bond at any major surety agency that is licensed in the state of Pennsylvania. SuretyNow is a reputable surety agency that is appointed with 10+ insurance carriers so it can find you the most affordable rate.
Dealership licenses in Pennsylvania have an expiration date on May 31 of every odd-numbered year. It is essential to renew your license before it expires to continue legally operating your dealership. Failure to renew on time will result in a suspension of your dealership's operations until compliance is achieved.
The Pennsylvania Department of Transportation will send you a renewal notice, typically two to three months before the license expiration, providing instructions for the renewal process. It is crucial to carefully follow these instructions and submit your renewal application early. In addition to license renewal, maintaining compliance as a licensed dealer requires renewing your auto dealer bond and providing proof of its existence. If your credit has improved, the cost of your bond may be lower than what you initially paid.
The Dealer Identification Number (DIN) is issued by Pennsylvania Department of Transportation (PennDOT) after they have completed an inspection of the dealership and you have received the Vehicle Dealer number from the Department of State.
