Opening a car dealership is an exciting endeavor. However, before officially opening your business to the public, you must obtain a car dealer license. All states require vehicle sellers to get a license to ensure they follow high ethical and commercial standards, set fair business practices, and enforce federal and local regulations compliance.

To help you plan your license application, we made this comprehensive guide with all the information you need to get your Connecticut dealer license.

Auto Dealer License Types in Connecticut

Connecticut licenses are issued by the Regulated Business Licensing Unit, a state Department of Motor Vehicles branch. Below, you will find the available license types:

• New Vehicle Dealer: Allows businesses to sell new vehicles.
• Used Vehicle Dealer: Reserved for those selling used vehicles exclusively.
• General Repairer/Dealer: Designed for repair shops that also sell used cars.
• Repairer: Intended for shops solely focused on vehicle repairs.
• Junkyard: Required for the sale of used and salvaged parts and vehicles.
• Renter and Leaser: Rental shops must obtain this license to operate legally.
• Manufacturer: It is required by auto manufacturers to sell cars to dealers operating in Connecticut.
• Auto Club: Mandatory for companies or individuals providing roadside assistance services.

Every license has its particular requirements. In this article, we will focus on new and used car dealer licenses.

Business Location Requirements

The state of Connecticut asks all applicants to submit their exact business address. This is a crucial step because you will have to buy, lease, or rent the place where you will conduct your business. Besides, you won’t be able to relocate for two years, so choosing the right place is essential for t your business’s future.

Before buying, renting, or leasing the property, check whether it meets the zoning requirements for running your business. You can ask for this information at your city’s council. The state requires dealerships to comply with various specifications depending on their type:

Dealer/Repairer Requirements‍

• A showroom and storage area for new and used cars.
• A repair shop with at least one vehicle capacity.
• A parts department and a business office for public attention.
• A sign displaying the customer's rights must be posted at a visible location.
• At least one qualified mechanic to repair and service vehicles sold by the business.

Used Car Dealer Requirements

• A showroom and storage area for two cars.
• A repair shop with at least one vehicle capacity.
• A parts department and a business office for public attention.
• At least one qualified mechanic to repair and service vehicles sold by the business.

New Car Dealers Requirements: New car dealers must comply with the used car dealer requirements plus:

• A franchise agreement or a contract with a vehicle manufacturer.
• Auto Dispute Program or Lemon Law signs displayed in the service area.
• Signs showing V.I.N. etching costs.
• A 250-gallon tank for oil disposal.

Businesses selling new vehicles of specific brands must also provide a list of the makes they will be selling.

Connecticut Dealer License Application Forms

To apply for your dealer license, you will need to fill out and submit a K-7 dealer application form. This form has a set of particularities that you should be familiar with before filling it out. Unlike other forms, it requires the signatures of state officials and must be signed in the presence of a notary, so it’s essential to avoid mistakes that can incur additional expenses and time loss.

1. Certificate of Proposed Location Approval

After establishing your business, it will have to be approved by a Zoning Board officer, a Fire Marshal, and/or the local chief of police. The K-7 form has a designated section for these officers to sign, confirming their approval of the business location.

2. Site Drawing (K-93)

Additionally, you must submit a site drawing according to the K-93 Connecticut DMV requirements. It’s important to hire an expert to ensure the drawing is as accurate as possible.

3. Fingerprint Background Check

All applicants, including business partners and individuals listed on the K-7 form, must submit their fingerprints for a background check run by the Department of Emergency Services and Public Protection. This step is necessary to ensure that all car dealers have high ethical standards, ensuring customer protection.

4. Trade Name Certificate (If Applicable)

A trade name certificate is required whenever an individual, partnership, or corporation conducts business under a different name than the sole proprietor, officers, or partners.
This certificate is issued by the town or city clerk from the municipality where the business will operate. In the case of corporations or LLCs, a Certificate of Existence issued by the Office of the Secretary of State will be required in addition to the trade name certificate. The trade name or DBA (Doing Business As) must be included in all documents submitted to obtain the license.

5. Driver’s License and Personal Information

You must submit a copy of the driver’s license of all owners listed in the K-7 application and one mechanic listed on the K-8 form for identity verification.

6. Vehicle Storage Rates (Form K-89)

Before submitting a license application, prospective dealers must present a K-89 form indicating information relative to vehicle storage. For example, the number of vehicles that may be stored, security details, and operating hours, among others.

7. Tax Registration and Sales Permit

When filing your K-7 dealer application form, you will be required to fill in your tax information and submit a copy of your CT State Sales Tax permit. To do so, you must get the following items:

• A Sales Tax Permit issued by the Connecticut Revenue Service.
• A Federal Employer Identification Number (FEIN) or Employer Identification Number (EIN) issued by the IRS.
• Register your business entity with the Connecticut Department of Economic and Community Development.
• A sales tax number provided by the Connecticut Department of Revenue Services.

8. Certificate of Insurance

You must attach a Financial Responsibility Insurance Certificate (Form R1325E) to your K-7 dealer application form. 

9. Marker Plates Request (Form K-06)

Along with your dealer application, you can request up to three marker plates for use in your stock vehicles for transportation purposes. It’s important to remember that even when you request zero plates, you still must attach the form R1325E.

10. DEEP Referral Sheet

All applicants must present a completed State of Connecticut Department of Energy and Environmental Protection (DEEP) referral sheet. This document covers all relevant matters regarding fluid disposal and environmental protection.

11. Surety Bond

All dealers in Connecticut must obtain an auto dealer surety bond from a reputable insurance or surety company. This requirement is to protect your customers from potential troubles or unlawful actions. Instead of paying for a deposit, states use the bonding system so that you don’t have to spend the total amount upfront. Depending on your credit score, you just have to pay 1 to 3% of the bond.

The bond amount required for new and used car dealers is $60,000. You must submit proof of your bond along with a form K-158 that contains all the details of your bond agent and contract.

12. LLC Additional Documents

If your business is operated as an LLC, you will also have to submit:

• A copy of the Operating Agreement.
• Copies of the Articles of Organization and all Amendments.
• Certificate of existence, issued by the Secretary of State office.
• Corporate or Company Agent for Service of Process (Form K-198).

13. Inspection Request (Form K-8)

Lastly, you must fill out and attach a K-8 form along with your K-7 form to request an inspection if your application is approved. Upon your dealer application approval, the DMV will send an inspector to your place of business to ensure it meets all the requirements. 

In addition to inspecting the premises, this individual will check that you and the corresponding staff members are capable of working with:

• Sales orders and invoices.
• Dealer plates or loan agreements.
• Federal odometer statements.
• Repair orders.
• Buyers’ guide stickers.
• Estimates, order documentation, and oral authorization.
• Supplementary I.D. card for plate use.

Your Connecticut dealer license will be fully approved after passing the state inspection.

Submitting Your Connecticut Dealer License Application

Remember that for your K-7 form to be valid, all signatures must be signed under the presence and supervision of a notary. Then, you can submit your application and the additional forms and documentation to the Connecticut Department of Motor Vehicles by mail or personally after scheduling an appointment. You will have to pay the following fees:

• Basic application fee (all licenses): $140
• New dealer license: $700
• Used dealer license: $560
• Repairer license (general and limited): $340
• Safety fee: $5 (per plate)

This is not intended as legal advice. If you have questions about dealer licensing requirements, please seek the assistance of legal counsel.

Partner With ACV Auctions Upon Receiving Your Connecticut Dealer License

After obtaining your Connecticut dealer license, register with ACV Auctions. Partnering with us grants dealers access to our online auctions, allowing you to source top-quality inventory with transparent vehicle condition reports. You can confidently bid on used car inventory in Connecticut, from Bridgeport and New Haven to Waterbury and beyond.

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Sources:

How to Get a Connecticut Dealer License [2023 Guide]. SuretyBond.org. Retrieved on September 20, 2023, from https://www.suretybonds.org/blog/connecticut-dealer-license 

Procedure for Obtaining a Connecticut Automotive Dealer’s or Repairer’s License. State of Connecticut Department of Motor Vehicles, Dealers and Repairers Licensing Unit. Retrieved on September 20, 2023, from https://portal.ct.gov/-/media/DMV/20/29/K36pdf.pdf