Life in The Fast Lane: Surety Bonds and Other Unlikely Requirements to Running a Used Car Dealership

It’s been three years since the recession began and times are still tough for many. Signs of a recovery, however, are starting to abound and President Obama in his 2011 State of the Union speech zoned in on reviving the economy, helping American businesses, and encouraging American innovation as his top priorities. One industry that’s experiencing healthy sales where the future looks optimistic is used car dealerships.

From February 2010 to February 2011, the used car market saw 12% growth and if the pace sustains the number of used car sold by the end of 2011 could hit 39.8 million. If you’ve always wanted your name plastered on license plate frames and the ability to drive any car off the showroom floor, a used car dealership is full of potential and people need cars in good economic times as well as bad. But how do you start a used car dealership?

Follow these six steps:

  1. Begin with scouting locations in your area. It is important to find a commercially zoned lot that is flat. This will help make paving and construction of your dealership easier.
  2. Next, obtain a dealer’s license from your state Department of Motor Vehicles. In most states, you are required to pass a written test, complete an application, and pay a fee before receiving a dealer’s license.
  3. Acquire a used car dealer bond to meet state surety requirements and protect your customers from lemons and used cars with hidden problems.
  4. Head to wholesale car auctions to supply your inventory. Also, determine whether you will buy and trade used cars from community members.
  5. Find a bank to become the primary auto lender for your dealership.
  6. Interview and hire part time mechanics and salesman to help you take the load of your shoulders.