Step 1: Entity Selection
Step 2: Obtain a Bond
Step 3: Select your Location
Step 4: Fill out and submit your Dealer License Application
Step 5: Determine the Vendors you will work with
Step 6: Submit your Sales Tax License Applications (City &/or State/County)
Step 7: Site Inspection
Step 8: Submit your approved Site Invoice to MVD
Step 9: Register online Dealer Services
Step 10: Register with Auctions
Step 11: Apply for your Financial Institutions License (unless you will only sell cash)
Wholesale Dealer License and Broker Dealer License require a $25,000 Bond. In order to qualify for this you need a good credit rating and the cost ranges from 1-5% of the amount annually.
Retail Dealer License requires a $100,000 Bond. In order to qualify for this you will likely need a minimum net asset value (in other words all of the value of equity in your home, any vehicles you own, securities, property, back accounts) of $400,000 and a minimum of $75,000 cash or other liquid assets in the bank.
If you live in an emission required area, mainly Maricopa or Pima Counties, you need to have a passed emission test prior to delivery the vehicle on any vehicle that is over 5 model years old. If you choose to do emissions tests as part of your recon process, be aware that when a vehicle is on a lot the test is only good for 60 days, if you inventory stays on the lot past that time, you will need to redo the test with a pass prior to delivery.
STATUE REFERENCE LINK: 49-550. Violation; classification; civil penalty
A. Except as provided in subsection B of this section, any person who violates any provision of this article or any rule of the director adopted under this article is guilty of a class 2 misdemeanor.
B. Any person who makes or issues any imitation or counterfeit of an official certificate or certificates of inspection or waiver is guilty of a class 5 felony.
C. Any person who knowingly demands or collects a fee for the inspection of a vehicle other than the fee fixed by the director for the inspection of vehicles of the same class is guilty of a class 2 misdemeanor.
D. Any person who makes or provides to the director the written statement required to obtain a certificate of waiver pursuant to section 49-542, subsection L, knowing the statement to be false, is guilty of a class 2 misdemeanor.
E. In addition to any other criminal penalty provided by law, a person who owns a vehicle and whose residence is located outside of area A or area B but who commutes in that vehicle to the driver's principal place of employment located within area A or area B without complying with this article or who violates section 15-1444, subsection D or section 15-1627 is subject to a civil penalty of one hundred dollars for a first violation of this subsection. For a second violation of this subsection within a one year period, a court shall impose a civil penalty of three hundred dollars. A court shall impose a civil penalty of twenty-five dollars for a first time violation of this subsection if the owner presents evidence that the vehicle is in compliance with this article.
F. In addition to any other criminal penalty provided by law, any dealer who is licensed to sell motor vehicles pursuant to title 28, chapter 10, whose place of business is located in area A or area B and who delivers a vehicle that does not conform with this section is subject to a civil penalty of one thousand dollars for a first violation of this subsection. For the second violation of this subsection within a one year period, a court shall impose a civil penalty of two thousand dollars and a suspension of the dealer's license for a period of ninety days.
49-542.03. Motor vehicle dealer; emissions testing; remedies; definition
A. In area A, if a motor vehicle dealer sells a motor vehicle that has less than one year remaining before it must undergo a transient loaded emissions test or has not taken a transient test pursuant to section 49-542 and which is not covered under a current federal emissions warranty and if the purchaser of the vehicle has the vehicle transient loaded tested within three days, excluding holidays, of the purchase and if the vehicle fails the test, the dealer shall do one of the following:
1. Rescind the purchase agreement and reimburse the purchaser for the cost of the test.
2. Make repairs at the dealer's expense which bring the vehicle into compliance with the transient loaded test.
3. Enter into a mutually acceptable alternative agreement with the purchaser.
B. A motor vehicle dealer who sells a vehicle subject to the provisions of subsection A of this section shall provide the purchaser with a written notice of the purchaser's rights pursuant to this section prior to completing the sale transaction. A motor vehicle dealer subject to the provisions of section 49-546, subsection G, shall also provide a written summary of the requirements of section 49-542 to the purchaser. The notice shall be available in English and in Spanish.
C. A motor vehicle dealer who meets the requirements of section 49-546, subsection G, shall conduct the dealer's business pursuant to this section for those vehicles which are required by law to be registered in area A.
D. A motor vehicle dealer in area B who sells a vehicle to a resident of area A may comply with emissions testing requirements pursuant to section 49-542, subsection F, paragraph 6 by complying with this section and the tampering inspection pursuant to section 49-542, subsection G, paragraph 4.
E. In this section, unless the context otherwise requires, "motor vehicle dealer" means a dealer who is a fleet operator and who has been issued a permit under section 49-546.
You need to wait until your sell is funded if it is going to financed before you offer a trade in for sale. Not only is it a nightmare to unwind two deals if the first doesn’t get funded, but it is also against the law.
STATUE REFERENCE LINK: 44-1371.
Motor vehicle transactions; conditional financing; traded motor vehicle; definition If a sale or lease of a motor vehicle from a motor vehicle dealer or a lessor to a customer is conditioned on final approval of financing by a lender or lessor, the motor vehicle dealer or lessor shall retain title and possession of any motor vehicle traded by a customer as part of the transaction until financing is finally approved or the traded motor vehicle is returned to the customer. Any remedy for a violation of this section may not be waived, modified or limited by agreement or contract. For the purposes of this section the term "motor vehicle dealer" has the same meaning prescribed in section 28-4301.
You cannot change odometers in any way and you cannot sell a vehicle when its odometer is not working. You also cannot go to a junk yard and get another odometer and switch them out. To avoid odometer fraud, you need to take it to a Federally Certified Odometer and Tachometer Repair Facility. Dick’s Tack & Speedo is the only federally certified repair shop in Arizona currently. Please note that instead of being in the Dealer section of the law it is in the commerce section of the law, as this is a Federal Regulation.
STATUE REFERENCE LINK: 44-1223. Fraudulent practices relating to motor vehicle odometers; classification
A. It is unlawful for any person to:
1. Advertise for sale, sell, use or install any device which causes the odometer of a motor vehicle to register mileage other than the true mileage driven. For the purposes of this paragraph the true mileage driven is that mileage driven by the vehicle as registered by the odometer within the manufacturer's designed tolerance.
2. Operate, with intent to defraud, a motor vehicle on any street or highway knowing that the odometer of such vehicle is disconnected or nonfunctional.
3. Replace, disconnect, turn back or reset the odometer of any motor vehicle with the intent to reduce the number of miles indicated on the odometer.
4. Sell or offer to sell, with intent to defraud, a motor vehicle on which the odometer does not register the true mileage driven.
B. Nothing in this section shall prevent the service, repair or replacement of an odometer, provided the mileage indicated thereon remains the same as before the service, repair or replacement. Where the odometer is incapable of registering the same mileage as before such service, repair or replacement, the odometer shall be adjusted to read "zero" and a notice in writing shall be attached to the left door frame of the vehicle by the owner or his agent specifying the mileage prior to repair or replacement of the odometer and the date on which it was repaired or replaced. Any removal or alterations of such notice so affixed shall be unlawful.
C. A person who violates the provisions of this section shall be guilty of a class 1 misdemeanor. What are the appropriate uses for my Dealer Plates? ANSWER: Dealer Plates (DL) Dealer Plates (DL) can be used for business or personal during or off business hours by any dealer principal or their full-time employees (see employees) who is defined at anyone that works 24 hours or more per week at the dealership and is a W-2 employee. Any part-time employee defined as anyone who works less than 24 hours can only use a DL plate during business hours and for business reasons. As of 12/31/2005, your spouse, children, parents, brother or sisters by either blood or adoption, and independent contractors may also use a DL plate, providing that they are on the dealer record and receive compensation. Dealer Transportation (DT) Plates Dealer Transportation or DT plates are meant for service businesses like a transmission or detail company with whom you have a contract to send your vehicles for service. The appropriate use is to allow their employees to drive on the plate even though they do not fit the criteria for your DL plates and transport them for those services. Suggestion: Use a TRP sleeve to put your signed contracts with the companies you are going to use for services, include a copy of your garage liability proof and make sure the driver has his/her driver’s license on them before giving out a DT plate.
STATUE REFERENCE LINK: DL Plates 28-4532. Dealer owned vehicles; registration exemption
A. A vehicle that is owned by a dealer and that is otherwise required to be registered is exempt from registration while the vehicle is owned by the dealer. A vehicle owned by a dealer may be operated under owner responsibility on public highways and streets according to the following provisions:
1. The vehicle displays a license plate issued to the owner as provided in this article in the manner prescribed in section 28-2354. 2. The owner, an employee of the dealer or a prospective buyer may operate the vehicle according to subsection C of this section.
B. Dealers' plates shall not be used on the following dealer owned vehicles:
1. A work or service vehicle.
2. A leased or rented vehicle owned by a dealer.
3. A laden vehicle designed for the transportation of cargo unless the cargo consists of no more than three vehicles that are owned by the dealer and the laden vehicle and the cargo are being operated or transported by the dealer for resale.
4. A vehicle that has been sold.
C. Except as provided in subsection B of this section, a dealer plate may be used on a dealer owned vehicle as follows:
1. When operated by the dealer or by an employee of the dealer in connection with the dealer's business. The vehicle may be operated as personal use transportation if it is assigned to a dealer or full-time employee of the dealer on a full-time use basis and if a record of the assignment is made as specified in section 28-4535. The authorized use applies to dealers or employees solely and does not apply to any other person as operator.
2. When operated by a prospective buyer for demonstration purposes for a period of not more than forty-eight hours for passenger vehicles and seventy-two hours for unladen pickups and trucks.
DT Plates 28-4661. Definitions
In this article, unless the context otherwise requires:
1. "Established place of business", in the case of a transporter, means a permanent site or location where the business of a transporter is conducted.
2. "Service" includes: (a) Exterior surface protection. (b) Interior surface protection. (c) Window sunscreen installation or glass tinting. (d) Body repair or maintenance. (e) Undercoating, soundproofing or rustproofing. (f) Audio equipment installation. (g) Other similar work required to prepare a vehicle for sale to the public.
3. "Transporter" means a person who is lawfully engaged in a contract with a dealer to perform service at the transporter's established place of business.
28-4662. Vehicle service transporter license plates; fee
A. A dealer may apply to the director on a form the director prescribes for the issuance of vehicle service transporter license plates. The applicant shall submit proof of the applicant's status as a dealer pursuant to this chapter and pay the fee prescribed by this section.
B. On approval of the application, the director shall issue to the dealer single serially numbered vehicle service transporter license plates. The director may limit the number of plates issued to one dealer based on the custom and usage of the industry and the volume of vehicles sold annually to the public.
C. In lieu of issuing new vehicle service transporter license plates annually, the director may furnish and issue tabs to indicate the year for which the plates are valid.
D. A plate or tab expires at midnight December 31 of each year.
E. The fee for a plate or tab issued to a dealer pursuant to this section is twenty dollars.
28-4663. Vehicles with vehicle service transporter license plates; exemption; civil traffic violation
A. A transporter may operate, move or transport on a highway a vehicle that is otherwise required to be registered without registering the vehicle if the following conditions are met:
1. The vehicle displays one valid transporter license plate issued to the dealer pursuant to this article.
2. The dealer placed the vehicle service transporter license plate on the vehicle for use by the transporter.
3. The transporter is operating, moving or transporting the vehicle directly to or from the transporter's established place of business and the dealer's established place of business.
B. A person other than a transporter or an employee of a transporter shall not operate on a highway a vehicle bearing vehicle service transporter license plates.
C. A violation of this section is a civil traffic violation.
3 day permits are not meant for dealerships. They are a consumer product. If you have a customer that purchases a vehicle and they want to do the MVD process of title and registration for themselves, you can allow the customer to use your computer to issue themselves a 3 day permit. However, never use a 3day permit on your own inventory or issue a 3day to your customer, this is misuse of a permit and you could be fined and get a ticket.
When you issue a Temporary Registration Plate (TRP) you have legally obligated yourself to process the Title and Registration on behalf of the customer within the 45 day window. Failing to perform your obligation can come with serious consequences up to and including losing your TRP Privileges or even your license. TRP’s may only be issued for a real deal sale to an Arizona Resident.
STATUE REFERENCE LINK: 28-4547. Requirements for temporary registration plates
A. A dealer shall not:
1. Issue, assign or deliver temporary registration plates to anyone other than a bona fide purchaser of a vehicle that is not registered for the current year.
2. Issue temporary registration plates unless the purchaser files an application for a certificate of title and an application for annual registration of the vehicle before or at the time the plates are issued.
3. Issue temporary registration plates unless the application for a certificate of title is accompanied by either a manufacturer's certificate of origin properly assigned by a licensed new motor vehicle dealer or a properly signed certificate of title.
B. The dealer, as the agent of the purchaser, shall forward the application for a certificate of title, the application for registration and the prescribed fees for both applications to the department.
When you take a vehicle on consignment, immediate when the contract is signed the vehicle is taken into your inventory. This means that you are fully liable for all regulatory issues including, but not limited to: emissions, implied warranty, and garage liability while on your lot, sales tax, etc.
STATUE REFERENCE LINK: 28-4410. Consignment contracts; definitions
A. A dealer in motor vehicles, trailers and semitrailers may possess and offer for sale a motor vehicle, trailer or semitrailer without having a duly or regularly assigned certificate of title in the dealer's possession if the dealer possesses all of the following:
1. A consignment contract or dealer acquisition contract.
2. The most recent registration card for the vehicle.
3. A statement by the lienholder disclosing all unsatisfied liens, if applicable.
B. A dealer may complete the sale of a motor vehicle, trailer or semitrailer offered for sale under subsection A of this section when the dealer possesses verification that all liens on the motor vehicle, trailer or semitrailer have been satisfied by the dealer or assumed by the purchaser.
C. A dealer who offers a vehicle for sale on consignment shall inform a prospective customer that the vehicle is on consignment to the dealer.
D. The director shall adopt rules on the minimum form and content of consignment contracts and dealer acquisition contracts.
E. This chapter does not allow the consignment of motor vehicles from one licensee to another licensee.
F. A dealer in motor vehicles, trailers or semitrailers may offer for sale or sell a motor vehicle, trailer or semitrailer without having a duly or regularly assigned certificate of title in the dealer's possession if the dealer possesses a complete photocopy of the duly or regularly assigned certificate of title, the original of which has been delivered to a financial institution or a subsidiary of the financial institution pursuant to an inventory financing arrangement.
G. For the purposes of this section:
1. "Consignment contract" means an agreement executed by both the owner of a vehicle and a licensed motor vehicle dealer pursuant to which the vehicle is delivered to the dealer to sell for the owner.
2. "Dealer acquisition contract" means an agreement that both:
(a) Is executed by both the owner of a vehicle, the title for which is in possession of a lienholder in accordance with the laws of this state or another state, and a licensed motor vehicle dealer.
(b) Transfers ownership of the vehicle described in subdivision (a) to a licensed dealer from a person other than a manufacturer, distributor, franchisor or dealer.
3. "Inventory financing arrangement" means an agreement under which a dealer grants a security interest to a financial institution under the provisions of title 47, chapter 9.
Technically, YES. In order to offer a car for sale on a lot to consumers, you must have either physical possession of the title or reasonable access to the title which means proof of where the title is and front and back copy of the title.
STATUE REFERENCE LINK TO 3 Sections: Evidence of Ownership
28-4409. Evidence of ownership requirement; exception
A. Except as provided in section 28-4410:
1. Each dealer in motor vehicles, trailers and semitrailers, including manufacturers who sell to other than dealers, having possession of a motor vehicle, trailer or semitrailer shall have at the same time either:
(a) Possession of a duly and regularly assigned certificate of title to the vehicle.
(b) Reasonable indicia of ownership or right of possession as provided in section 28-4410.
2. A dealer or manufacturer shall not offer for sale or sell a motor vehicle, trailer or semitrailer until the dealer or manufacturer has obtained a certificate of title to the motor vehicle, trailer or semitrailer, except that a certificate of title is not required for a new motor vehicle sold by manufacturers to dealers.
B. A wholesale motor vehicle auction dealer is exempt from the requirement of having to possess a duly and regularly assigned certificate of title and from other requirements relating to the reassignment of title documents and disclosures to buyers. A wholesale motor vehicle auction dealer may buy or sell a motor vehicle at wholesale in the wholesale motor vehicle auction dealer's own name if the wholesale motor vehicle auction dealer complies with the provisions of this title relating to certificates of title, reassignments of title documents and disclosures to buyers.
Possession, in name 28-4412. Guaranty disclosure; used motor vehicles; definition
A. Before the consummation of the sale of a used motor vehicle, a motor vehicle dealer shall:
1. Provide each purchaser with a written statement that:
(a) Indicates whether or not an express warranty or guaranty is associated with the used motor vehicle.
(b) Is distinguished from the body of the sales agreement through the use of either bold-faced type or bold-faced type of a color other than that used in the body of the agreement.
(c) States "as is -- not expressly warranted or guaranteed", if the used motor vehicle to be sold is not expressly warranted or guaranteed.
(d) Explicitly states the nature and extent of the express warranty or guaranty, if the used motor vehicle to be sold is expressly warranted or guaranteed.
(e) States "as is -- not guaranteed to pass vehicle emissions inspection. Vehicle not eligible for certificate of waiver and must be repaired to meet emissions standards", if the used motor vehicle is a disabled vehicle that is offered for sale at a wholesale public auction with an auctioneer who is a licensed used motor vehicle dealer and if the vehicle does not comply with the requirements prescribed in section 49-542.
2. Direct the purchaser's attention to the written statement.
B. This section does not negate any implied warranties otherwise applicable to the sale of a used motor vehicle, including the implied warranty of merchantability described in section 44-1267.
C. Before the seller attempts to sell a motor vehicle the seller shall possess the title to the motor vehicle and the title shall be in the seller's name.
D. For the purposes of this section, "disabled vehicle" means a motor vehicle that cannot operate on its own motive power.
Transfers 28-4455. Determination of standing; failure to object
A. If the director intends to determine that the objector has established both of the reasons prescribed by section 28-4454, subsection B, the director shall notify the franchisor and allow the franchisor to submit evidence in rebuttal before the director makes a final determination. The director's determination is only for the purpose of establishing standing to object to the establishment of the new motor vehicle dealer franchise.
B. If no objection is filed within fifteen days from the date the notice was received by the person or if the objector fails to establish both of the reasons pursuant to section 28-4454, subsection B, the director shall approve the notice.
There is one reference to Full-time employees in statute; the definition of a Full-time employee is one that works 24 hours or more. This is used with the statute on Dealer Plates to determine misuse of Dealer Plates. (see Dealer Plate Use)
STATUE REFERENCE LINK TO: 28-4531.
Definitions In this article, unless the context otherwise requires:
1. "Cargo" means commercial or industrial items but does not include personal items such as luggage and camping equipment.
2. "Dealer" means a new motor vehicle dealer, a used motor vehicle dealer or a wholesale motor vehicle dealer.
3. "Employee of the dealer" means an employee who is paid compensation and who appears on the records of the dealer as an employee for whom social security, withholding taxes and all other deductions required by law for employees are made and for whom all applicable payroll taxes are paid by the dealer.
4. "Employee of the manufacturer" means an employee who is paid compensation and who appears on the records of the manufacturer as an employee for whom social security, withholding taxes and all other deductions required by law for employees are made and for whom all applicable payroll taxes are paid by the manufacturer.
5. "Full-time employee of the dealer" means a person who qualifies as an employee of the dealer and who works at least twenty-four hours each week for the dealer.
6. "Full-time employee of the manufacturer" means a person who qualifies as an employee of the manufacturer and who works at least twenty-four hours each week for the manufacturer.
7. "Manufacturer" means a person engaged in the business of manufacturing motor vehicles, trailers or semitrailers or a person engaged in the manufacture of integrated automotive systems and modules that are being tested at or in conjunction with a facility located in this state.
8. "Modules" means groups of component parts that are arranged in close physical proximity to each other within a vehicle and that may be assembled by the supplier and shipped to the manufacturer for installation in a vehicle as a unit.
9. "Systems" means groups of component parts that are located throughout a vehicle and that operate together to provide a specific vehicle function.
No, there are no exceptions. An individual may only transact three vehicle sales in a rolling 12 month period before being required to obtain a dealer license.
STATUE REFERENCE LINK TO: 28-4502. Used motor vehicle dealer; violation; classification
In addition to the penalties provided in sections 28-4499, 28-4500 and 28-4501, a person who acts as a used motor vehicle dealer in violation of the licensing provisions of this chapter is guilty of a class 1 misdemeanor. Can I let others use my dealer license, sign up buyers on my dealer license at the auctions or sell my license to someone else? ANSWER: No, only the person or company printed on the license and its W-2 employees are allowed to do the business. Allowing someone else to use the license is considered to be license reassignment and is prohibited.
STATUE REFERENCE LINK TO: 28-4592. License assignment prohibited; classification
A licensee who assigns a license to another person is guilty of a class 1 misdemeanor.
As many of you have experienced, obtaining a dealer’s license is a long and arduous process. Once you receive your dealer license, it is just as important to use it properly, so you can continue being in the car business. Your Dealer License has a name and address on it for a reason. It only allows for the business, person or W-2 employee’s of the business or person to buy, sell, and offer to sell or exchange value in vehicles and only from the address listed on the license If you wish to have an offsite sale, like a tent sale, you need to fill out an off site permit application and submit it to MVD for approval.
STATUE REFERENCE LINK TO: 28-4334. License requirement; established place of business; unimproved lots and premises; violation; classification
A. Except as provided in sections 28-4335, 28-4401 and 28-4402, a person shall not engage in any business regulated by this chapter except from an established place of business and unless the person has obtained from the director a license authorizing the person to engage in the business.
B. A licensee may use unimproved lots and premises or parts of unimproved lots and premises for the storage of motor vehicles or for the storage of motor vehicle parts or accessories if the lots or premises are located in the county in which the licensee has an established place of business.
C. A person who violates subsection A of this section is guilty of a class 1 misdemeanor.
There are three different reference points for dealerships to look at from an MVD standpoint.
1) LAW OR STATUTES: www.azleg.gov is the website to access dealer law. You will see in the top navigation bar the words Statutes, put your mouse over the word and Arizona Revised Statutes heading will appear. You will now see many "Titles" each are a category of law, kind of like an encyclopedia. You need to go to Title 28 which is the Transportation Law section. The Chapter that deals with dealerships specifically is Chapter 10 and the Chapter that deals with Title and Registration is Chapter 7.
2) DEALER ADMINISTRATIVE RULE: http://mvd.azdot.gov/mvd/MVDRules/rules.asp is the link to the Dealer Administrative Rules. Here you find how to ask for an Administrative Hearing, what the requirements for a Consignment Contract are and many other topics that you may need access to
3) MVD DEALER POLICY: is available from AZ Dealer Services on Service Arizona or Secure Arizona.
ACTUAL $$$ BENEFITS (totaling up to $4,760)