Surety Bonding
In order to get licensed in the state of Arizona, you will first need to obtain bonding. The bonding is to protect the consumer against issues relating to vehicle titles. This is probably one of the largest hurdles for those wanting to open a vehicle dealership as the bonding company is going to want to make sure that the people they are bonding are financially strong enough that the bonding company will be able to recoup any amounts that they have to pay out. The current bonding requirement is $100,000. The prior bonding requirement was $25,000. Older dealerships may be grandfathered from the new requirement. If an older dealership looses its $25,000 bond, it will be required to renew at the $100,000 requirement. The cost can be anywhere from about $1000 to several thousand dollars depending on your financial position. Your insurance company should be able to help you with your bonding requirements.
MVD Dealer License
Once you have your bonding, you will need to apply for an Arizona MVD Dealer License which authorizes you to sell vehicles to the public. You can find current licensing information on the Motor Vehicle Department website's Licensing page. In order to qualify for the license, your physical place of business needs to have a site-inspection performed by the MVD and is required to meet several requirements. For your convenience I have provided the following links:
- Link to Motor Vehicle Dealer Licensing Unit This will link you to the offical website of the MVD licensing unit were you can download the most current forms.
- Phamplet issued by the MVD with various licensing information. This is a very short phamplet, issued by the Motor Vehicle Department, regarding licensing information.
Arizona Department of Financial Institutions
This department protects the public from improper financing contracts. The AzDFI issues two different licenses: The AzDFI Motor Vehicle Dealer license (not to be confused with the Dealer License issued by the MVD), and the AzDFI Sales / Finance License. When applying for these licenses you will need to fill out a separate application package for each license. The fines for non-compliance on these licenses are very absorbent (typically 1000s of dollars; maximum of $250,000) and are subject to quite a bit of discretion by the AzDFI.
AzDFI Motor Vehicle Dealer License
The AzDFI Motor Vehicle Dealer License authorizes you to write up financing contracts. Just about every dealership will be required to have this one. This is true because unless you are doing strictly cash sales (it's not a cash sale just because you receive all the cash from a financial institution like a bank; that's an outside financing deal), you are required to have this license. The license fee is $150/year plus there is a $300 application fee when you apply for it.
AzDFI Sales / Finance License
The second license you may be required to have from the AzDFI is the Sales / Finance license. This license is pretty much required if you plan on doing any in-house financing (Buy Here Pay Here). The license is required once your outstanding debt is greater than $25,000. The license fee is $500/year plus there is a $800 application fee when you apply for it.
For your convince, I have provided the following links:
- Link to Arizona Department of Financial Institution - Motor Vehcile Dealers This is the Motor Vehicle Dealers web page from the official website of the Arizona Department of Financial Institutions.
- AzDFI Application Package This is the application used to file for a Motor Vehicle Dealer license as well as the Sales/Finance license. To make sure that you have the most recent application package, you should probably download it from the above link.
