How to Get an Auto Dealer License in Kentucky: A Step-by-Step Guide
Starting a car dealership in Kentucky can be an exciting business opportunity, but before you can legally sell vehicles, you need to understand the state's licensing requirements. From choosing the right dealer license and securing a compliant business location to obtaining insurance and preparing your application, each step plays an important role in getting your dealership ready to operate.
Whether you're opening an independent used car dealership, planning to sell vehicles wholesale, or establishing a franchised new car dealership, understanding the process ahead of time can help you avoid costly mistakes and unnecessary delays.
In this guide, we'll walk through how to get an auto dealer license in Kentucky, what documents you may need, how dealer bonds and auto dealer insurance fit into the process, and what to consider before opening your business.
All American Bonds and Insurance (QUICKERBONDS) helps auto dealers explore surety bond and commercial insurance options as they prepare to meet their licensing requirements.
Step 1: Choose the Right Type of Kentucky Dealer License
Your first step is determining which license matches your dealership's business model. Kentucky offers several license categories, and a dealer may need more than one depending on the activities conducted.
Motor Vehicle Commission
The most common license types include:
Used motor vehicle dealer: For businesses selling used vehicles at retail.
Wholesale motor vehicle dealer: For businesses selling vehicles exclusively to other licensed dealers. Retail sales to the general public are prohibited.
New motor vehicle dealer: For businesses with the required manufacturer or distributor franchise agreement.
Motor vehicle auction dealer: For businesses primarily engaged in negotiating or conducting vehicle sales through auctions.
Motor vehicle leasing dealer: For businesses arranging qualifying vehicle leases.
Motorcycle dealer: For businesses exclusively dealing in motorcycles.
Recreational camper dealer: For businesses selling qualifying recreational vehicles.
Kentucky also licenses certain specialized and automotive recycling businesses. If you plan to sell regular or rebuilt-title vehicles and also dismantle or recycle salvage vehicles, you may need additional licensing.
Motor Vehicle Commission
For most entrepreneurs opening an independent used car dealership and selling directly to consumers, the used motor vehicle dealer license is the starting point.
Step 2: Establish Your Business and Select a Name
Before submitting your application, decide how your dealership will be legally organized. Depending on your plans, you might operate as a sole proprietor, limited liability company, corporation, or another eligible business structure.
If you form an LLC or corporation, keep your formation documents available. If you operate under an assumed name, Kentucky may require additional documentation with your application.
Choose a dealership name that meets Kentucky's requirements
The Kentucky Motor Vehicle Commission says your trade name must include wording that clearly identifies the business as a motor vehicle dealership. Examples include:
Used Cars
Auto Sales
Auto Mart
Motor Sales
The name should match the dealership name shown on the application, the sign where required, and the insurance filing. Kentucky also restricts the use of certain terms, including manufacturer vehicle makes and words such as “wholesale,” “leasing,” “broker,” and “consignment,” depending on the license category and circumstances.
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Tip: Settle on your business name before ordering signage or applying for insurance. Keeping the name consistent can help avoid unnecessary corrections.
Step 3: Secure a Compliant Dealership Location
Your physical location is one of the most important parts of the application process. Kentucky defines an established place of business as a permanent, enclosed commercial building in the state that is accessible to the public and where dealership activities are legally permitted under applicable zoning and land-use requirements.
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The Commission's published dealer requirements also specify a display lot or customer parking area of at least 2,000 square feet and an office of at least 100 square feet. The office must have typical furnishings, electricity, and a telephone, and be on or immediately adjacent to the display lot. Confirm these requirements with the Commission before committing to a property.
Motor Vehicle Commission
Check zoning before signing a lease
Contact the local planning or zoning office to verify that your proposed property can legally be used as a car dealership. Check whether the property has enough space for vehicle display, customer parking, and the required office.
Do not assume that a residential property, virtual office, or appointment-only setup will qualify. Kentucky's published requirements call for a commercial building that is open to the public at reasonable times.
Motor Vehicle Commission
What if you share a property with another business?
Kentucky requires separation between the dealership's display or customer parking area and areas used by another business. The office must also be a distinct, defined area with appropriate furnishings. The Commission may require a physical barrier when needed to separate the businesses.
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Resolve any shared-location questions with the Commission before finalizing the arrangement.
Step 4: Install Your Dealership Sign
Retail applicants generally must install a permanent sign that identifies the dealership and is visible and readable from the nearest roadway. The Commission's published requirements specify lettering at least nine inches high. The sign must display the same business name shown on the application and applicable assumed-name documentation. Wholesale applicants are generally exempt from the sign requirement.
Motor Vehicle Commission
Make sure the sign is installed before submitting your application if the requirement applies to your license type.
Step 5: Prepare Your Financial Statements
Kentucky requires applicants to complete a detailed financial statement. The Commission uses the information to evaluate financial qualifications, and incomplete or inaccurate statements may delay approval, result in a surety bond requirement, or contribute to denial.
Motor Vehicle Commission
Be prepared to document your assets and liabilities, including:
Cash and business bank accounts
Vehicle inventory
Accounts and notes receivable
Business real estate and other assets
Loans and other debts
Accounts payable and taxes owed
The Commission's application information states that applicants must demonstrate a minimum of $100,000 in cash and/or an acceptable combination that includes $50,000 in unencumbered business cash and $50,000 in unencumbered motor vehicle inventory. It also states that applicants may be required to post a surety bond in an amount up to $1 million.
Motor Vehicle Commission
Because financial qualification is an important part of the application, verify how these standards apply to your business and proposed license with the Commission.
Practical tip: Prepare your bank statements, inventory records, and liability information before completing the financial statement. Be accurate and disclose liabilities rather than focusing only on assets.
Step 6: Obtain the Required Insurance
Kentucky's published dealer requirements call for garage liability insurance for most dealer categories. The Commission's materials list these minimum liability limits:
Coverage | Minimum limit |
Bodily injury or death — one person | $250,000 |
Bodily injury or death — one occurrence | $500,000 |
Property damage | $250,000 |
Automotive recycling dealers have a different policy requirement, generally involving commercial general liability coverage at the listed limits.
Motor Vehicle Commission
The certificate of insurance must be submitted by the insurance company, rather than by the insurance agent, according to the Commission's published requirements. The Commission also indicates that insurance documentation does not need to be on file before application approval; applicants are notified when it is required.
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Consider other dealership insurance needs
Garage liability insurance is only one part of managing dealership risk. Depending on your operations, you may also want to discuss dealer open lot insurance and other commercial coverages with a qualified insurance professional.
Dealer open lot coverage may be relevant to physical damage risks involving inventory, while liability coverage addresses different exposures. Actual coverage depends on the policy terms, exclusions, and endorsements.
All American Bonds and Insurance helps auto dealers explore insurance options designed for their businesses.
Step 7: Determine Whether You Need a Kentucky Dealer Bond
One of the most important financial requirements to understand is Kentucky's potential dealer bond requirement.
Unlike states that require every dealer in a particular category to obtain a bond for one fixed amount, Kentucky's application materials state that the Commission may require an applicant to post a bond of up to $1 million. The financial statement is an important part of that evaluation.
Motor Vehicle Commission
That means you should not assume that every applicant needs the same bond amount or that your dealership will automatically be exempt from bonding.
What is a motor vehicle dealer surety bond?
A surety bond is a financial guarantee involving three parties:
Principal: The dealership or applicant required to obtain the bond.
Obligee: The party protected by the bond, as identified in the bond documents.
Surety: The company that issues the bond.
A surety bond is not the same as an insurance policy that protects the dealership's own assets. If a valid claim is paid under a bond, the dealership may have a contractual obligation to reimburse the surety.
How can you prepare if a bond is required?
If the Commission determines that a bond is necessary, contact a surety bond provider to discuss the required amount, application process, and underwriting criteria.
The surety may consider factors such as:
Personal and business credit
Business financial statements
Available assets and outstanding liabilities
Business experience
The required bond amount
Approval and pricing depend on the specific circumstances of the applicant and the surety's underwriting process.
Need help exploring your options? All American Bonds and Insurance works with auto dealers on surety bonds and commercial insurance. Visit www.QUICKERBONDS.com or call 844-321-2663.
Step 8: Obtain Your Kentucky Sales Tax Permit
The Kentucky Motor Vehicle Commission's application instructions require a Revenue Cabinet sales tax permit number. Applicants should follow the Kentucky Department of Revenue's registration process to obtain the appropriate permit information.
Motor Vehicle Commission
Before submitting your application, confirm that your business has completed the required tax registration and that you have the information requested on the form.
It's also a good time to establish a bookkeeping system for tracking vehicle purchases, sales, expenses, inventory, and taxes. Good records can make it easier to manage the dealership and prepare accurate financial information in the future.
Step 9: Complete the Dealer License Application
Kentucky uses Form TC 98-1, Application for Motor Vehicle Dealer License. Download the latest version from the official Kentucky Motor Vehicle Commission resources page. The Commission currently lists an updated 2026 application and warns that applications printed double-sided will be returned.
Motor Vehicle Commission
Depending on your license category and business structure, prepare the applicable supporting documents.
Application preparation checklist
Before you submit
0 of 10
Complete the current Form TC 98-1
Prepare business formation or assumed-name documents, if applicable
List the owners, partners, or corporate officers and ownership percentages
Complete the financial statement and provide supporting records
Obtain the required sales tax permit information
Take clear color photographs of the dealership premises
Draw the office and display lot layout, including the nearest roadway
Include the lease or property documentation requested by the application
Complete the personal data and background check forms
Confirm the applicable fees and required payment method
Follow the latest application instructions carefully. Missing documents, incomplete financial statements, or inconsistencies in your business information may delay the process.
Step 10: Pay the Application Fees
The Kentucky Motor Vehicle Commission's current application information lists the following fees:
Fee | Amount |
Application processing fee | $175 |
Criminal background check | $25 per listed owner, partner, or corporate officer |
Dealer license | $200 per license |
Salesperson license | $40 per license |
The processing fee and background check fees are submitted with the application. The Commission indicates that the dealer and salesperson license fees, as well as insurance documentation, are not required before application approval.
Motor Vehicle Commission
For example, an application listing two owners would have $225 in initial processing and background check fees, assuming both owners are subject to the background check charge. This does not include later licensing fees, insurance, any required bond, or other startup expenses.
Confirm the applicable fees and payment instructions before sending your application. The Commission's application information says to make the payment payable to the Kentucky State Treasurer; cash is not accepted.
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Step 11: Submit Your Application and Plan Around the Review Schedule
The Kentucky Motor Vehicle Commission meets once a month, generally on the second Friday. To be considered at a meeting, your completed application must arrive at least 10 working days before the meeting date. Weekends, holidays, and the meeting date itself do not count toward the 10-working-day period. The meeting schedule can change, so confirm the current cutoff date with the Commission.
Motor Vehicle Commission
The Commission's application information lists the following contact details:
Kentucky Motor Vehicle Commission
200 Mero Street, 3rd Floor West
Frankfort, KY 40622
Phone: 502-573-1000
Official website: mvc.ky.gov
Before mailing your application, verify the current mailing instructions and address on the official website.
Keep copies of your application, supporting documents, and payment records. If you have questions about the application deadline or your submission, contact the Commission directly.
Step 12: Complete the Remaining Requirements Before Opening
Submitting your application does not automatically authorize you to operate a dealership. Follow the Commission's instructions and wait for the required approval and licensing steps to be completed.
After approval, you may need to:
Pay the applicable dealer license fee.
Complete the required salesperson licensing process.
Submit acceptable insurance documentation.
Satisfy any surety bond requirement imposed by the Commission.
Confirm that your approved license covers the correct dealership location.
Complete the applicable tax and business registrations.
Kentucky requires salesperson licensing for people employed to sell motor vehicles, including dealership owners in applicable categories. The Commission's published requirements also address people negotiating sales, displaying vehicles for sale, purchasing on behalf of the dealership at auction, driving on dealer plates, and handling transfer work. Check which requirements apply to your employees and activities.
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If you plan to operate more than one dealership location, Kentucky requires a separate dealer license for each location.
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Once licensed, make sure you understand the rules for vehicle titles, sales documentation, dealer plates, temporary tags, and consumer disclosures. Licensing is the start of your compliance responsibilities, not the end.
How Much Does It Cost to Get an Auto Dealer License in Kentucky?
Your total startup cost depends on the type of dealership you plan to open, your property, the number of people who need licenses and background checks, your insurance premiums, and whether a surety bond is required.
The following table summarizes the main expenses to plan for.
Expense | What to expect |
Application processing | $175 |
Background checks | $25 per applicable owner, partner, or corporate officer |
Dealer license | $200 per license |
Salesperson licenses | $40 per license |
Business location | Rent or purchase, utilities, and setup |
Signage | Permanent sign where required |
Premium depends on coverage and underwriting | |
Premium depends on bond amount and underwriting | |
Inventory and operating capital | Varies with your business plan |
The application and license fees above come from the Commission's published application information. Verify current amounts before applying.
Motor Vehicle Commission
Remember that the cost of licensing is only one part of opening a dealership. You also need sufficient capital for inventory, repairs and reconditioning, advertising, rent, payroll, and other operating expenses.
Common Mistakes to Avoid When Applying for a Kentucky Dealer License
Choosing a location before checking the requirements
A property may look suitable but fail to meet the Commission's established-place-of-business requirements. Verify zoning, office space, display area, and access before signing a lease.
Submitting incomplete financial statements
Missing liabilities, inaccurate asset values, or insufficient supporting documentation can delay your application. Provide complete and accurate financial information.
Assuming every dealer needs the same bond
Kentucky's application says the Commission may require a surety bond based on its evaluation. Confirm your specific bonding requirements rather than relying on a general estimate.
Using inconsistent business names
The dealership name should match the application and relevant business records, sign, and insurance filing. Resolve any differences before submitting your paperwork.
Missing the application deadline
Because applications must arrive before a monthly Commission meeting, mailing documents too late can delay consideration. Call to confirm the current cutoff date.
Opening before the licensing process is complete
Do not assume that submitting the application is enough. Confirm that your dealer license and all required approvals are in place before beginning regulated dealership activities.
Get Help With Your Kentucky Dealer Bond and Insurance
Opening an auto dealership involves more than finding inventory and choosing a location. You need to understand the licensing process, organize your financial documentation, and prepare to meet Kentucky's insurance and any applicable bonding requirements.
All American Bonds and Insurance (QUICKERBONDS) helps auto dealers explore surety bond and commercial insurance options. Whether you're opening an independent used car dealership or expanding an existing business, our team can help you understand your coverage options.
Need Help With Dealer Bonds or Insurance?
Contact All American Bonds and Insurance to discuss your dealership's needs.
844-321-2663
Frequently Asked Questions About Getting a Kentucky Auto Dealer License
1. How do I get an auto dealer license in Kentucky?
Choose the correct license type, establish a compliant commercial location, prepare your financial statement, obtain your sales tax permit information, complete Form TC 98-1, submit the required documentation and fees, and follow the Commission's approval process.
2. How much does a Kentucky auto dealer license cost?
The Commission's current application information lists a $175 processing fee, $25 per applicable owner, partner, or corporate officer for background checks, and a $200 dealer license fee. Salesperson licenses are listed at $40 each. These amounts exclude insurance, any required bond, and other business startup expenses.
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3. Do I need a surety bond to get a Kentucky dealer license?
The Commission may require an applicant to post a bond based on its review of the application and financial qualifications. Its published application information references potential bond requirements up to $1 million. Contact the Commission to determine whether a bond is required for your specific application.
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4. What insurance do Kentucky auto dealers need?
Kentucky's published requirements call for garage liability insurance for most dealer categories, with minimum limits of $250,000 per person, $500,000 per occurrence, and $250,000 for property damage. Automotive recycling dealers have different policy requirements. Confirm the rules that apply to your license category.
Motor Vehicle Commission
5. Can I get a Kentucky dealer license without a physical lot?
Kentucky requires an established place of business that meets its commercial building and display-area requirements. The Commission's published guidance specifies a display lot or customer parking area of at least 2,000 square feet and an office of at least 100 square feet. Confirm current requirements before choosing a location.
Motor Vehicle Commission
6. How long does it take to get a Kentucky dealer license?
The timeline depends on whether your application is complete and when it can be considered by the Commission. Applications generally must arrive at least 10 working days before the scheduled meeting. Confirm the meeting date and cutoff directly with the Commission.
Motor Vehicle Commission
7. Do Kentucky wholesale dealers need a license?
Yes. Kentucky has a wholesale motor vehicle dealer license category. Wholesale dealers sell to other licensed dealers and may not sell directly to the general public.
Motor Vehicle Commission
8. Do dealership owners need salesperson licenses?
Kentucky's published requirements state that owners and partners are required to be licensed as salespersons, subject to applicable license-category exceptions. Confirm the requirements for your dealership and each person involved in sales-related activities.
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9. Where can I get the Kentucky dealer license application?
Visit the Kentucky Motor Vehicle Commission Resources page and download the latest Form TC 98-1 and instructions.
10. Who can help me with a Kentucky dealer bond?
All American Bonds and Insurance can help you explore dealer bond and commercial insurance options. Visit QUICKERBONDS.com or call 844-321-2663.
Official Kentucky Licensing Resources
For the most accurate information, review the state's official resources before applying:
Disclaimer: This article is for general informational purposes only and does not constitute legal, tax, or insurance advice. Licensing rules, fees, and application requirements may change. Verify current requirements with the Kentucky Motor Vehicle Commission and other relevant authorities before applying.
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