How to Get a Motor Vehicle Dealer License in Michigan: Complete Step-by-Step Guide
Thinking about opening a car dealership in Michigan? Whether you want to operate an independent used car dealership, new vehicle dealership, or another type of motor vehicle business, you must obtain the appropriate dealer license from the Michigan Department of State before legally operating as a dealer.
For most independent dealerships selling used vehicles, the relevant license is a Class B Used Vehicle Dealer License. Michigan currently lists an annual license fee of $160 for Class B dealers. The state also requires applicants to meet specific location, zoning, insurance, training, bonding, background-check, and inspection requirements. (Michigan)
Getting the license can seem complicated, especially if you are starting your first dealership. This guide walks through the Michigan dealer licensing process step by step, including the requirements for your location, Michigan dealer bond, insurance, training, application, inspection, and dealer plates.
Important: Michigan's requirements can change. The Michigan Department of State states that its Dealer Manual is periodically updated and that Michigan law takes precedence if there is a conflict between the manual and the law. (Michigan)
Step 1: Determine Which Michigan Dealer License You Need
The first step is determining what type of dealership you plan to operate.
Michigan has several dealer license classifications, including:
Class A – New Vehicle Dealer: Buys and sells new vehicles under a franchise agreement with a manufacturer.
Class B – Used Vehicle Dealer: Buys and sells used vehicles.
Class C – Used Vehicle Parts Dealer
Class D – Broker
Class R – Automotive Recycler
Class W – Wholesaler
The current annual license fee listed by the Michigan Department of State is $160 for these dealer classifications. (Michigan)
For an independent dealership that primarily buys and sells used cars to retail customers, Class B is generally the license classification that applies.
If you're opening a traditional independent used car dealership, the remainder of this guide focuses primarily on the Class B licensing process.
Step 2: Establish Your Dealership Business
Before applying for a dealer license, you need to establish the business that will operate the dealership.
Depending on how your dealership is structured, this may involve:
Forming an LLC or corporation
Registering an assumed business name, if applicable
Obtaining the appropriate business registrations
Establishing your dealership's legal business name
Obtaining a federal EIN
Registering for any applicable Michigan tax requirements
Michigan's dealer application materials require business documentation such as Articles of Incorporation or an Assumed Name Filing, depending on the business structure. (Michigan)
Make sure the business name and address you use are consistent across your dealer application, auto dealer surety bond, garage liability insurance documents, zoning documentation, and other licensing paperwork.
A mismatch can create unnecessary delays.
Step 3: Find an Approved Location for Your Dealership
One of the biggest mistakes new dealers make is finding a property first and only afterward discovering that the property does not meet Michigan's dealer-location requirements.
Michigan requires dealers to maintain an established place of business. (Michigan)
For new and used vehicle dealers, the location must meet several requirements.
Your dealership must have a permanent building
The property must contain a permanently enclosed building or structure that is owned, leased, or rented by the dealer.
It cannot simply be:
A residence
A tent
A temporary stand
Temporary quarters
The dealership must continuously occupy the location in good faith for dealership purposes. (Michigan)
Your office must meet minimum requirements
For a Class A or Class B dealership, the building must include an office of at least 150 square feet.
The office must have:
Standard office furniture
Working utilities
A working restroom
A working telephone listed in the dealership's name
The dealership's required books, records, and files must also be maintained at the established place of business, unless the Department approves a qualifying secondary location within the required radius. (Michigan)
Your property needs sufficient vehicle display space
Michigan's current Dealer Manual specifies at least:
1,300 square feet of land for displaying a minimum of 10 vehicles
An additional 650 square feet for customer parking
The display and customer parking areas must be adequately surfaced and well-lit during business hours. (Michigan)
Your dealership needs a permanent sign
The dealership must have an exterior sign displaying the dealership name.
The sign must be permanently affixed to the building or land and have lettering clearly visible from the roadway. (Michigan)
You must post your business hours
Michigan requires the dealership's regular hours of operation to be conspicuously posted.
For new and used vehicle dealers, the posted hours must total at least 30 hours per week, with at least 15 of those hours occurring between 8 a.m. and 5 p.m., Monday through Friday. (Michigan)
Step 4: Verify Zoning and Municipal Approval
Before committing to a dealership property, check with the appropriate local government authorities.
Michigan requires new and used vehicle dealers to have zoning and municipal approval for the dealership location. (Michigan)
This is an important step because a property that looks suitable for a dealership may not be approved for automotive sales under local zoning regulations.
Before signing a long-term lease, confirm:
The property is properly zoned.
Vehicle sales are permitted.
The municipality will approve the dealership.
The property can meet Michigan's established-place-of-business requirements.
The landlord permits the required dealership signage and vehicle display.
Getting these questions answered before signing a lease can prevent an expensive problem later.
Step 5: Complete Michigan's Required Pre-License Training
If you're applying for an original Class B Used Vehicle Dealer License, Michigan has a specific training requirement.
The applicant, applicable partners, or officers must complete Michigan's pre-license dealer training within the six months preceding the application date. (Michigan)
The training covers important dealership topics, including:
Michigan Vehicle Code requirements
Dealer licensing requirements
Secretary of State e-Services
Dealer records
Vehicle sales documentation
Temporary registrations
Dealer inspections
Dealer plate usage
Sales and use tax requirements
Consumer and dealer protections (Michigan)
The Michigan Department of State currently conducts dealer training virtually through Microsoft Teams, and preregistration is required. (Michigan)
Don't complete the training too early
Because the pre-license training must fall within the six-month period before the application, timing matters.
If you complete the training too far in advance, you may have to complete it again before submitting your application.
Step 6: Obtain Your Michigan Dealer Surety Bond
A $25,000 Michigan vehicle dealer surety bond is an important part of the licensing process for Class B dealers.
Michigan requires Class A, B, and D dealers to maintain a $25,000 vehicle dealer surety bond under the circumstances specified by the Department of State. (Michigan)
The bond is not the same thing as insurance.
A surety bond is designed to provide financial protection for qualifying losses involving things such as fraud, cheating, or misrepresentation in connection with the dealer's vehicle business, subject to the bond's terms and applicable law.
How much does a $25,000 dealer bond cost?
The $25,000 is the bond amount, not necessarily the amount you pay.
The premium you pay for the bond depends on factors such as:
Credit
Business experience
Financial information
Bonding history
Underwriting requirements
That means two dealerships can have the same $25,000 bond requirement but pay different premiums.
Make sure the bond is completed correctly
Michigan's application packet specifically warns that the surety bond must be completed correctly or the dealer license cannot be issued. The business name and address on the bond must match the dealership information. (Michigan)
This is one reason it is important to work with a surety professional familiar with Michigan auto dealer bonds.
Step 7: Obtain Michigan No-Fault Fleet Insurance
New and used vehicle dealers must have Michigan No-Fault fleet-type insurance as part of the licensing requirements. (Michigan)
This requirement is particularly important because dealer plates are involved in dealership operations.
Your insurance documentation should accurately reflect the dealership's legal name and address.
You should also discuss your broader dealership insurance needs with your insurance professional.
Depending on your operation, you may need coverage such as:
A dealer license does not automatically provide insurance protection for your dealership or inventory.
Step 8: Establish a Relationship With a Registered Repair Facility
Michigan requires new and used vehicle dealers to have either:
Their own registered repair facility, or
An agreement with a registered repair facility. (Michigan)
If you do not operate your own repair facility, you will need the appropriate agreement with a registered facility.
This requirement should be addressed before submitting your application so you have the necessary documentation available.
Step 9: Prepare Your Dealer License Application
Once you've completed the major prerequisites, you can prepare the Michigan Vehicle Dealer License Application.
The application package includes documentation related to requirements such as:
Business information
Dealer location
Zoning approval
Municipal approval
Repair facility information
Other required supplemental forms
Michigan allows dealer applications to be submitted online, and the state also provides an original vehicle dealer application packet. (Michigan)
Take your time completing the application.
Make sure your:
Business name
Dealership address
Ownership information
Zoning documents
Municipal approvals
all match.
Incomplete or inconsistent information can delay processing.
Step 10: Complete the Fingerprinting and Background Check
Applicants may be required to complete a criminal history/background check through the Michigan process.
One important detail: do not get fingerprinted before receiving the state's instructions.
Michigan's dealer application packet states that after the application is received, the applicant will be sent the appropriate form and instructions for completing the background-check process, including fingerprinting. (Michigan)
Following the state's instructions in the proper order can prevent unnecessary delays or having to repeat part of the process.
Step 11: Schedule and Pass the Pre-License Inspection
Before the dealer license is issued, Michigan conducts a pre-license inspection of the dealership location. (Michigan)
The purpose of the inspection is to verify that the proposed business location satisfies Michigan's established-place-of-business requirements.
Inspectors may verify items such as:
Business address
Building
Office
Sign
Posted business hours
Vehicle display area
Customer parking
Telephone
Restroom
Utilities
Records area
Zoning/municipal compliance
This is why it is a mistake to submit an application for a location that is still under construction or missing required features.
Your dealership should be ready for inspection.
Step 12: Apply for Your Dealer Plates
Once your dealership is licensed, dealer plates become an important part of operating the business.
Michigan's Department of State says new and used vehicle dealers must request at least two dealer plates. (Michigan)
Dealer plates have specific authorized uses.
They aren't simply general-purpose plates that can be used however the dealership wants.
Dealer training covers proper dealer plate usage, and dealers should understand the rules before allowing employees or others to use dealership plates. (Michigan)
Step 13: Set Up Michigan e-Services
Michigan dealer e-Services are an important part of operating a dealership.
The system can be used for various dealership functions and account management.
Dealer training specifically covers how to use Secretary of State e-Services, including functions related to temporary registrations and dealership users. (Michigan)
You should make sure the appropriate dealership employees have access and understand their responsibilities.
Don't wait until you need to complete an important transaction to figure out how your dealership's e-Services account works.
Step 14: Complete Your Post-License Dealer Training
Getting your Class B license isn't the end of Michigan's dealer training requirements.
New Class B dealers must select a designated individual to complete continuing dealer education within 90 days after the license is issued. (Michigan)
Michigan also requires Class B dealers to maintain the applicable training schedule, including continuing education once every 24 months for designated individuals at retail sales locations. (Michigan)
For dealerships with multiple retail locations, Michigan has specific rules concerning designated individuals.
Understanding these requirements early can help prevent compliance problems after opening.
How Long Does It Take to Get a Michigan Dealer License?
Michigan's dealer application packet states that applications can take up to 30 days to process. Missing or incomplete documentation can cause additional delays. (Michigan)
Your actual timeline can depend on how quickly you complete each prerequisite.
For example, delays can occur if:
Your property isn't approved for dealership use.
Zoning documentation is incomplete.
Your municipality approval isn't finished.
Your surety bond contains an error.
Your garage liability insurance documentation is incomplete.
Required training hasn't been completed.
Your application is missing documents.
Your dealership isn't ready for inspection.
The best way to shorten the process is to prepare everything before submitting the application.
How Much Does It Cost to Get a Michigan Dealer License?
Your total startup cost will depend on your dealership and location.
The state currently lists a $160 annual license fee for a Class B used vehicle dealer. (Michigan)
But the license fee is only one part of the startup cost.
You should also budget for:
$25,000 dealer surety bond premium
Business formation
Lease or property costs
Zoning and local requirements
Signage
Office setup
Vehicle display area
Customer parking
Dealer plates
Training and related business expenses
The $25,000 bond should not be confused with a $25,000 expense. The $25,000 represents the bond's penal sum; the dealer typically pays a premium for the bond.
Michigan Used Car Dealer License Checklist
Before submitting your application, make sure you've addressed the major requirements:
Business
Establish your business entity
Register your assumed business name if applicable
Obtain your EIN
Determine your dealer license classification
Location
Find a qualifying dealership property
Confirm zoning
Obtain municipal approval
Establish your office
Prepare vehicle display space
Prepare customer parking
Install required dealership signage
Post business hours
Make sure utilities and telephone requirements are satisfied
Licensing
Complete required Class B pre-license training
Obtain your $25,000 Michigan dealer bond
Establish your repair facility arrangement
Complete the dealer application
Submit required business documents
Complete fingerprint/background-check requirements
Complete the pre-license inspection
Pay required fees
After Licensing
Obtain dealer plates
Set up e-Services
Complete required post-license training
Establish proper recordkeeping procedures
Train employees on dealer rules
Maintain required insurance and bond coverage
Common Mistakes Michigan Dealers Should Avoid
Choosing a property before checking zoning
Don't assume that because a property has parking and an office it can be used as an auto dealership.
Verify zoning and municipal requirements first.
Getting the dealer bond with the wrong information
Your bond information needs to match your dealership.
A mistake in the legal business name or address can create a licensing problem. (Michigan)
Completing Class B training too early
Remember that the pre-license training must fall within the six months before the application.
Waiting until the last minute to prepare for inspection
Your dealership should be physically ready before the inspection.
Assuming the dealer license covers your insurance needs
The dealer license and dealer bond do not replace commercial insurance.
Your dealership should evaluate its liability, inventory, property, and other insurance exposures separately.
Treating dealer plates like regular plates
Dealer plates have specific rules regarding their use. Employees should understand those rules before using dealership plates.
Ignoring ongoing compliance
Getting the license is only the beginning.
Michigan dealers must continue meeting licensing, recordkeeping, insurance, training, sales, title, tax, and other regulatory requirements.
What Happens After You Get Your Michigan Dealer License?
Once your dealership is licensed, you'll need systems in place to operate compliantly.
That includes keeping accurate dealership records, properly documenting vehicle purchases and sales, handling titles and registrations correctly, managing temporary registrations, maintaining insurance and bonding, and keeping up with dealer training.
Michigan's dealer training specifically addresses recordkeeping, deal jackets, vehicle sales documentation, police books, temporary registrations, inspections, dealer plates, and sales and use tax requirements. (Michigan)
Your dealership should establish these processes before selling your first vehicle rather than trying to build them after problems occur.
Get Your Michigan Dealer Bond Before You Apply
For many new Michigan dealerships, obtaining the dealer bond is one of the most important licensing steps.
At All American Bonds and Insurance, we help auto dealers obtain the surety bonds they need to operate their dealerships.
We specialize in:
If you're preparing to open an independent used car dealership in Michigan, getting your bond and insurance requirements handled early can make the licensing process much smoother.
Ready to get started?
All American Bonds and Insurance / QUICKERBONDS📞 844-321-2663📧 info@quickerbonds.com🌐 QUICKERBONDS.com
Frequently Asked Questions About Getting a Michigan Dealer License
How much is a Michigan used dealer license?
Michigan currently lists the annual fee for a Class B Used Vehicle Dealer License at $160. (Michigan)
How much is the Michigan dealer bond?
Michigan requires a $25,000 vehicle dealer surety bond for Class B dealers under the applicable bonding requirements. The $25,000 is the bond amount, not necessarily the premium you pay for the bond. (Michigan)
Do I need a physical location to get a Michigan dealer license?
Yes. Michigan requires dealers to maintain an established place of business. New and used vehicle dealers must meet specific requirements for the building, office, vehicle display area, customer parking, signage, hours, zoning, and municipal approval. (Michigan)
Do Michigan used car dealers need special training?
Yes. Original Class B applicants must complete Michigan's pre-license dealer training within six months before applying. New Class B dealers also have continuing training requirements after receiving their license. (Michigan)
Do I need insurance to get a Michigan dealer license?
New and used vehicle dealers must have Michigan No-Fault fleet-type insurance as part of the licensing requirements. (Michigan)
Do I need a repair facility?
Yes. Michigan says new and used vehicle dealers must have either their own registered repair facility or an agreement with a registered repair facility. (Michigan)
How long does it take to get a Michigan dealer license?
Michigan's dealer application packet says applications can take up to 30 days to process, although incomplete applications can take longer. (Michigan)
How many dealer plates do I need?
Michigan requires new and used vehicle dealers to request at least two dealer plates. (Michigan)
Can I operate my dealership before my license is approved?
You should not conduct business as a Michigan motor vehicle dealer without the required dealer license. Michigan law requires persons or entities conducting business as vehicle dealers to be licensed by the Michigan Department of State. (Michigan)
Where can I find the official Michigan dealer requirements?
The Michigan Department of State maintains its Vehicle Dealers resources and Dealer Manual online. Because requirements can change, dealers should review the current state materials when preparing an application. (Michigan)
Final Thoughts
Opening a used car dealership in Michigan requires more than simply registering a business and finding vehicles to sell. You need the proper dealer license, an approved business location, zoning and municipal approval, required training, a dealer surety bond, insurance, a repair-facility arrangement, background checks, and a successful pre-license inspection.
For most independent used car dealerships, the Class B Used Vehicle Dealer License is the key license to understand.
The most important thing is to work through the process in the correct order. Get your location requirements confirmed, complete the required training, secure your Michigan dealer bond and insurance, prepare your application, and make sure your dealership is inspection-ready before submitting everything.
And when you're ready for your Michigan dealer bond or dealership insurance, All American Bonds and Insurance / QUICKERBONDS can help you get the coverage and bonding requirements handled so you can focus on getting your dealership open.
844-321-2663 | info@quickerbonds.com | QUICKERBONDS.com
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