Alabama Dealer Licensing Guide
Getting Your Alabama Motor Vehicle Dealer License
An orientation to the process, what to expect, in what order, and who to ask.
Before You Begin
This guide is a general orientation only. It is not legal, financial, tax, or licensing advice. Requirements, fees, and bond amounts are set by the State of Alabama and change from time to time.
Always confirm every current requirement directly with the Alabama Department of Revenue, Motor Vehicle Division before you spend money or submit anything.
The authority on this process
Alabama Department of Revenue (ALDOR)
Motor Vehicle Division
Applications are submitted electronically through the Alabama Partner Registration portal in MyDMV.
Alabama MyDMV · Alabama Department of Revenue
The governing law
Code of Alabama 1975, Sections 40-12-390 through 40-12-400, and Section 40-12-264 for dealer license plates.
Welcome and Congratulations
Opening a dealership is a serious undertaking, and the licensing process is the first real test of it.
Alabama's process is more streamlined than some states. There is no state-mandated pre-licensing class, and the application is filed online, but the process has its own particulars, especially around plates, privilege licenses, and ongoing insurance.
Wayne Reaves has worked alongside independent dealers for years. We are not a licensing service and we do not file on your behalf. But we have watched a lot of people go through this, and we know what the road looks like. This guide lays out the shape of it so you know what is coming.
When you are licensed and ready to open your doors, we would like to be the software that runs your dealership. Until then, we are happy to be a familiar voice.
Do you actually need a license?
Alabama's dealer licensing requirement reaches new and used motor vehicle dealers, motorcycle and trailer dealers, wholesale dealers, and rebuilders.
The statutory definition of a used motor vehicle dealer turns in part on how many vehicles you sell at retail in a calendar year.
If you are near the line, confirm your situation with ALDOR rather than guessing.
The Shape of the Process
Alabama runs this in two stages, and the order is not optional. The regulatory license comes first, and the plates come after.
- 01 Business Location & Signage Establish a permanent business location and satisfy the applicable signage and location requirements.
- 02 Business & Sales Tax Register your business and obtain an Alabama sales tax number if required for your operation.
- 03 Surety Bond Obtain the continuous surety bond required by ALDOR on the department's form.
- 04 Liability Insurance Obtain and maintain the required blanket motor vehicle liability insurance.
- 05 Regulatory License Submit the dealer regulatory license application electronically through the Alabama Partner Registration portal.
- 06 Privilege Licenses & Plates After the regulatory license is issued, obtain the appropriate privilege license and then request dealer plates.
Stage one: the dealer regulatory license. Establish your business location and signage, register your business and obtain a sales tax number if applicable, obtain your continuous surety bond, obtain blanket liability insurance, and submit the license application electronically through the Alabama Partner Registration portal.
Stage two: plates. Once the regulatory license is issued, purchase the appropriate privilege license or licenses at your county licensing office, then request dealer plates through your MyDMV account.
Plates are issued by ALDOR contingent on proof of the privilege licenses.
How the application actually works: You submit electronically first. ALDOR then provides a transmittal sheet listing which supporting documents you must send to the department.
The online submission is the beginning of the paperwork, not the end of it. You can request a document after you file.
Why we do not list dollar amounts here: Bond amounts, license fees, plate fees, and insurance minimums are set by statute and rule, and they change.
Alabama's dealer bond amount has been revised before. Any printed figure can become outdated.
Get current numbers from ALDOR's dealer licensing information and from a licensed surety or insurance agent.
Your Business Location & Sign
Alabama requires dealers, including retailers, wholesalers, rebuilders, and reconditioners, to maintain a permanent business location with a verifiable phone listing.
Retail dealers are required to have a permanent sign identifying the business.
Photographs of your location and signage are part of what the department will want.
Confirm the current photo requirements and location standards with ALDOR before you build out or sign a lease.
Check local zoning separately with your city or county. Zoning is a local matter and entirely separate from state licensing.
Check zoning before you sign anything.
Discovering that a property cannot be permitted for vehicle sales after you have committed to a lease is one of the most expensive mistakes available in this process.
Business Registration & Sales Tax
Register your business entity as appropriate for your structure.
Which structure is right for you, whether an LLC, corporation, partnership, or sole proprietorship, is a question for an attorney or CPA, not for a software vendor.
Your structure affects your taxes and your personal liability.
Alabama sales tax
Retail dealers generally need an Alabama sales tax number obtained from the Alabama Department of Revenue.
Wholesale-only operations may be treated differently, so confirm what applies to your license type rather than assuming.
Federal EIN
If your structure requires a federal EIN, obtain it free of charge directly from the IRS .
Be cautious of third-party sites that charge for this.
The single most common delay: name mismatches.
The name on your application, bond, insurance certificate, and business registration must all match exactly.
An abbreviated business name or an unregistered trade name can hold up the file.
Surety Bond
Alabama requires licensees to file a continuous surety bond with ALDOR on the department's own bond form.
The bond runs continuously rather than being purchased per term.
It also satisfies the separate designated agent bonding requirement. Alabama dealers are required by law to become designated agents of the department.
Do not rely on an older bond amount.
Alabama's dealer bond amount has been increased in the past, and older guides may still quote a superseded figure.
Confirm the current required amount and the correct ALDOR bond form with the department or a licensed surety agent before you buy.
Choosing a provider
Wayne Reaves does not sell bonds or insurance, does not recommend a particular agent, and receives nothing if you use one provider over another.
Your state association, an independent insurance broker, or a licensed surety agent can help you compare.
Get more than one quote. Pricing varies considerably based on credit and business history.
Blanket Liability Insurance
Alabama requires each dealer to maintain blanket liability insurance covering all vehicles owned by or associated with the business, with minimum limits set by the department.
Proof is submitted as an original certificate or a legible copy.
This one has teeth.
Alabama attaches a substantial civil penalty to failure to maintain a blanket motor vehicle liability policy, and coverage lapses put the license itself at risk.
This is not a document you produce once at application and forget. It must stay active for as long as you are licensed.
Confirm the current minimum limits with ALDOR.
Tell your agent specifically that the policy is for an Alabama motor vehicle dealer license so the coverage form and limits are written correctly.
Filing the Application
Applications for the dealer regulatory license are submitted to ALDOR electronically through the Alabama Partner Registration portal.
Applications are not accepted in person at a Motor Vehicle Division office for same-day issuance. Everything goes through the portal.
What happens after you submit
After submission, ALDOR provides a transmittal sheet identifying the supporting documents the department needs from you.
Respond promptly and completely. Partial responses extend the timeline.
The online filing is the first part of the application process. You can request a document after you file.
Resolve outstanding ALDOR liabilities first
Outstanding liabilities to the department, such as unresolved penalty assessments, can affect your application.
If you have any history with ALDOR on a prior license or dealer plates, resolve it before applying.
Privilege Licenses & Dealer Plates
This is the step people are often surprised by.
The dealer regulatory license from ALDOR is not the whole picture.
After it is issued, you must visit your county licensing office to purchase the appropriate privilege license or licenses.
Dealer plates are then issued by ALDOR, contingent on proof of those privilege licenses, and requested through your MyDMV account.
How many plates can you get?
The number of dealer plates available differs between new and used dealers.
Additional plates may be available to dealers who process a high volume of title transfers in the prior license year.
Plate fees are generally not refundable or prorated.
Plate misuse carries real penalties.
Alabama defines who may operate a vehicle displaying a dealer plate and which vehicles may display them.
Violations can involve escalating civil penalties, and willful misstatements can create criminal exposure.
Dealer plates also must be returned within the required period if a license is revoked or forfeited.
Rental and lease vehicles, tow trucks, and service vehicles are among the prohibited uses identified in the guide.
Read the current rules in full before you put a dealer plate on anything.
Staying Licensed
Ongoing obligations begin the day your license is issued.
- Your surety bond must remain continuous.
- Your blanket liability coverage must remain active.
- Lost or stolen plates must be reported to law enforcement, with a police report retained for audit.
- Vehicles withdrawn from inventory must be properly registered.
Confirm your renewal cycle and deadlines with ALDOR when your license is issued, and calendar them immediately.
Federal Obligations Start on Day One
State licensing is not the whole picture.
Federal rules apply the moment you begin selling. The FTC's Used Car Rule requires a Buyers Guide displayed on every used vehicle offered for sale.
Other federal requirements apply to advertising, financing, and recordkeeping.
These are enforced by agencies with no connection to ALDOR.
Ask your attorney or your state association what applies to your operation.
How Wayne Reaves Fits In
We want to be straightforward about what we do and do not do.
What we do not do
We do not:
- File applications
- Form business entities
- Sell bonds or insurance
- Provide legal or tax advice
- Interpret state requirements on your behalf
Those questions belong with ALDOR, your attorney, your CPA, and licensed agents.
We also do not receive any compensation or referral fee from bond or insurance providers.
What we do
We build dealer management software and dealer websites for independent dealers.
Our systems support:
- Inventory
- Deal tracking
- Customer records
- Reporting
- Compliance tools
- Dealer websites that put inventory in front of buyers
Where to Get Answers
Use the appropriate agency or professional for the question you are trying to resolve.
Disclaimer
This guide is provided for general informational purposes only and is intended as a high-level overview of the dealer licensing process. It is not intended to be comprehensive and should not be relied upon as legal, tax, financial, insurance, regulatory, or licensing advice. Laws, regulations, agency procedures, forms, fees, bond and insurance requirements, deadlines, and other licensing requirements may change at any time and may vary based on license type, business structure, location, or individual circumstances.
Wayne Reaves Computer Systems Inc. does not represent or warrant that the information contained in this guide is complete, current, or applicable to every situation. Before making financial commitments, signing a lease, purchasing insurance or a bond, submitting an application, or otherwise acting in reliance on this information, verify all current requirements directly with the appropriate state and local licensing authorities and consult qualified legal, tax, insurance, or other professional advisors as appropriate.
Use of this guide does not create an attorney-client, advisory, fiduciary, or other professional relationship with Wayne Reaves Computer Systems Inc.