To get a used or new car dealer license in Delaware, you must meet some requirements and file an application to the Delaware Division of Motor Vehicles. In this article, you will find a comprehensive guide to get licensed in Delaware and make your car dealership dream come true.

‍Select a License Category

The Delaware Division of Motor Vehicles issues these types of licenses: 

• New Vehicle Dealer: Allows businesses to sell new and used vehicles.‍
• Used Vehicle Dealer: Enables business owners to sell used vehicles only.‍
• Wholesale Dealer: Permit to sell vehicles only to licensed dealers. All dealers must get this license to sell vehicles to other dealers.‍
• Mobile Home Dealer: License for selling or buying new and used motorhomes.‍
• Vehicle Auction Services: Enables businesses or individuals to act as intermediaries between dealerships and earn a commission.

We will be focusing on new, used, and wholesale dealers.

Delaware Dealer License Requirements

1. Criminal Record and Background Check

Delaware wants all dealers to conduct their business legally and ethically. That’s why all applicants must submit a criminal history background check and a signed authorization. Additionally, you must send a copy of your criminal history background check to the State Bureau of Identification, which charges a fee of $52.

2. Business Name Availability

The Delaware Department of Motor Vehicles requires new dealerships to have unique business names. It’s important to check whether your business name is not taken by another dealer. If you will be conducting business under a trade name, you may have to register it with your local Prothonotary’s office.

3. Permanent Business Location

Look for an appropriate location to establish your business. Ensure that the property meets the zoning requirements of your city or county zoning office. You must purchase, lease, or rent the place and get a zoning permit on your behalf. 

The site must have a verifiable phone line registered on behalf of the business name and enough room to display at least five vehicles. It also needs to meet the following requirements:

• The building must have an office space with a filing cabinet, desk, computer, and laser printer.
• The building premises must have a sign of at least 24”x36” displaying the approved business’ name.
• If the property is located on a state-maintained road, you will have to obtain an entrance permit from the Department of Transportation (DOT)

4. Business and Tax Registration

Before applying for a dealer license, you must register your business with the State of Delaware at the Division of Revenue, and you may also need to register it at the Division of Corporations, depending on your business type. You can find a business guide at the Division of Revenue with further instructions for your business.

The business license has an annual cost of $100. You will have to attach a copy of your business license with your dealer license application.

5. Liability Insurance

If you have vehicles in stock, you must send proof they are insured. You will have to contact the Delaware DMV for information regarding this matter, as it varies depending on your license type and other factors.

6. Delaware Auto Dealer Bond

All Delaware dealers must have a $25,000 auto dealer surety bond. Before applying for your dealer license, you must obtain a surety bond from a reputable insurance or surety company. The state requires this bond to ensure you operate your dealership ethically and responsibly. 

The annual fee of the bond is a small percentage of the total sum, varying from one to three percent, depending on your credit score. The better your credit score, the lower the prime will cost. You must send proof of your surety bond and provide the details of the bonding company when filing your application.

7. Inspection of Business Location

Before filing for your license, you must contact the Delaware DMV and schedule an inspection of your business location. They will check whether the property fulfills all the requirements.

Applying for Your Delaware Dealer’s License

Once you have met all the requirements, and your location has passed the inspection, you can submit your dealer application online or send it by mail to the Delaware Division of Motor Vehicles. Remember to double-check the required documentation and have it on hand when applying. 

Delaware doesn’t charge a licensing fee; however, there are some costs you should consider:

• Dealer business license fee: $100
• Dealer Plate: $10 (for each vehicle)
• Criminal Records Check: $52.50

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 Delaware Dealer License

After you get your Delaware Dealer License, register with ACV Auctions and start enjoying the benefits of our online auctions and excellent vehicles with transparent condition reports, helping dealers offer great units to their customers. ACV Auctions has used car inventory available from all over Delaware, from Wilmington and Middletown to Dover and Newark. 

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Sources:

"The Complete Delaware Dealer License Guide." BryantSuretyBonds.com, 31 Jul. 2019, www.bryantsuretybonds.com/blog/the-complete-delaware-dealer-license-guide Accessed 23 Sept. 2023.

"The Complete Delaware Dealer License Guide." SuretyBonds.org, 5 Dec. 2019, www.suretybonds.org/blog/complete-delaware-dealer-license-guide  Accessed 23 Sept. 2023.

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