The Indiana Secretary of State's Auto Dealer Services Division is responsible for setting the licensing requirements for vehicle dealers in the state.
This short article will help you:
- Understand each major step including the documentation required
- Point you to the correct resources to get your license fast
- Fill in the blanks and answer common questions during the licensing process
- And help you fulfill your surety bond requirement quickly and for as little money as possible
The Indiana Vehicle Dealer License Classifications
Before we get into the requirements needed to obtain your license, let's cover each of the license classifications.
New and/or Used Dealers
You're required to obtain this license if you sell more than 12 vehicles per year including:
- Semi-trailers and trailers
- Off road vehicles
- Snowmobiles
- Mini-trucks
- Recreational vehicles
These are two separate and independent licenses.
Auto Auctions
You must obtain this license if your primary business is arranging, sponsoring, managing, advertising, hosting and facilitating auctions of more than 3 vehicles or watercraft within a 12 month period.
Manufacturer and Distributor
You must obtain this license if you're engaging in manufacturing or assembling new motor vehicles or major component parts.
You need the representative license if you act on behalf of a manufacturer.
The distributor license is required if you engage in selling motor vehicles to dealers. This is commonly referred to as an auto wholesaler.
Converter Manufacturer
This license is required when you add parts to, take parts from, or modify a previously assembled or manufactured vehicle. Examples of activities that require this license are:
- Adapting vehicles for use by the physically disabled
- Modifying vehicles to create rescue vehicles
- Adding custom features and amenities to already build vehicles
Transport Dealer
A transport dealer is responsible for transferring the ownership of at least 12 vehicles during a 12 month period as part of a primary business. Examples of transfer dealers are:
- Financial institutions
- Insurance companies
- Junk and salvage yards
Any institution typically involved in repossessed and salvaged vehicles.
Watercraft Dealers
Finally, a watercraft dealer who offers to sell (or advertises for sale) at least 6 watercraft or watercraft trailers within a 12 month period.
The trailers must exclusively be designed for the transportation of watercraft.
Step 1: Business Entity And Personal Documentation
<img src="/assets/suretybondsdirect/images/blog/2024/the-5-indiana-motor-vehicles-dealership-licensing-steps-business-entity-personal-documentation-1200x750.jpg" alt=“Step 1 is to set up your business entity and your personal documentation. This includes registering to collect taxes and getting your NMEDA if required." class="lazy img-fluid my-3" width="1200" height="750" />
You need to make sure your business is appropriately registered with the Indiana Secretary of State, Business Services Division.
Here's where you can find all of the necessary paperwork for your specific business structure.
Register To Collect Sales Tax On Vehicles Sold
You also need to make sure you have your copy of the retail merchant certificate from the Department of Revenue. This form will register you with the state as a sales tax entity.
You will be responsible for collecting the 7% state sales tax and submitting your collected tax to the state on a quarter basis.
National Mobility Equipment Dealers Association
If your dealership is going to sell vehicles that have wheelchair access or other special mobility requirements, you'll need to show your National Mobility Equipment Dealers Association (NMEDA) accreditation.
Personal Information
You will need all the basic information for the owners including:
- Physical address
- Copy of personal identification
- Year of birth
- Last four of the socials
- Whether the owner has ever had a dealer license suspended, revoked, or denied in any state
- Which of the owners is designated as the primary owner
- Which owners names will be printed on the license (3 owner's names maximum)
That last part is the selection of an owner to undergo a criminal background check. This check is conducted through IndentoGo.
This background check must be conducted within 60 days of the application being submitted.
Step 2: Certificate of Insurance And Bonding
There are two insurance policy related requirements before a license can be issued, liability insurance and purchasing a surety bond.
Liability Insurance
New dealers regardless of the classification are required to purchase the following minimum level of liability insurance:
- $100,000 for bodily injury to one person per accident
- $300,000 for bodily injury per accident
- $50,000 for property damage per accident
Of course you can purchase more depending on what your business thresholds are.
Auto Dealer Surety Bond
An auto dealer surety bond is a unique type of insurance contract you're required to purchase as protection, ensuring you:
- Conduct business with your customer based using good business practices and ethics
- Pay the correct amount of sales tax for the vehicles and merchandise sold through the dealership
This surety bond is the primary tool the Indiana Auto Dealer Services Division will hold dealerships accountable to the promises they make during the licensing process.
The Auto Dealer Services Division requires a $25,000 dealer bond for all license classifications.
Learn all the details about this Indiana auto dealer bond including:
- The details about why this bond is required
- How much a $25,000 auto dealer surety bond costs
- Real pricing examples based example rates we've seen helping customers
- Plus how to purchase and keep your bond active
Click here and watch our video explaining auto dealer surety bonds.
Step 3: Location Requirements
Your dealership location (if required by your license classification) needs to meet these requirements:
- Can't be a personal residence or a temporary location
- Must be able to accept physical mail delivery
- No other dealership or vehicle license can operate at the same location
- No other business (in general) can be located at the same location
- The dealership cannot be located in a retail strip mall or retail complex
- Must be easily accessible to the public
- Open at least 30 hours per week during normal business hours
- The dealership property must be at least 1300 square feet
- There must be enough minimum display space for 10 vehicles
- Have adequate lighting during hours of operation
- An easily visible and permanent sign with the same name to match the application
- Enough space for customer parking
- The office must be at least 100 square feet
- The office must be adequately and appropriately furnished
- All office utilities must work properly
- Finally, the property and office must be reflective of a vehicle dealership (no confusion or misleading signals)
There are many vague requirements like having "enough space" or "adequate lighting". You will provide photos of all of these areas and if the Division requires updates to be made, they will let you know.
Photo Requirements Of Dealership Location
These following requirements pertain to most license classifications, unless you don't have to have a dealership lot. Make sure you use the Divisions site for complete details on a per license basis.
However, most license classifications will require clear photos of the:
- Dealership's permanent sign
- Vehicle display area
- Exterior of the full dealership including the customer parking location
- Exterior of the business office
- Interior of the office including proof of utilities and all pieces of furniture
- Sales lots and any storage lots on the property
Zoning Affidavit
Finally, you'll need to complete a zoning affidavit signed by a city zoning official. This is a legal pledge stating that you are going to use the location for the focus of your license classification.
This zoning affidavit must be completed within 90 days prior to submitting the application.
Step 4: Dealer Training Certificate
Dealer education requirements are only required for used vehicle dealers who have not previously been licensed in the past.
The course is given through the Indianan Independent Automobile Dealers Association. This course includes the following topics:
- Title delivery and documentation
- Salvaged titles, interim plates, and notary publics
- Non-US vehicles, handing additional fees and audit information
- Resources, renewals and association information
Finally you must pass an examination covering all the material you learned.
Step 5: Online Application And Fees
The final step is bringing this information together using Indiana's online application process.
They provide step by step instructions for uploading all the required documents and providing all the necessary signatures.
The application fees are:
- Automotive salvage recycler - $10
- Manufacturer or distributor representative - $20
- Converter manufacturer - $20
- Transfer license - $20
- Auto dealer or auction dealer - $30
- Watercraft dealer - $30
- Manufactured home dealer - $30
- Manufacturer or distributor - $35
There are also dealer plate fees depending on your requirements which range from $3 for an interim dealer plate up to $40 per plate for manufacturer and auto dealer initial plates.
We Are Ready To Help You Get Your Indiana Auto Dealership Surety Bond
As you can see the licensing process in Indiana is very easy to follow.
The requirements are almost uniform from one licensed classification to the next. This makes it easier and a little faster to get through the process.
When it comes time for you to get pricing on your dealership surety bond, use our free online quote form.
You can also call a surety bond specialist at 1-800-608-9950 for personalized help over the phone.
Remember, we can provide you with the lowest possible pricing with no obligation to purchase. This means you have no risk to see how low of a price we can get you.
