Alabama Motor Vehicle Dealer License Requirements – 2025 Overview
In Alabama, anyone regularly engaged in selling motor vehicles must obtain a dealer regulatory license from the Alabama Department of Revenue (ALDOR), Motor Vehicle Division. Most applications and renewals are handled electronically through the state’s MyDMV system.
Important: This page is an unofficial summary. Always review the latest guidance on the Alabama Department of Revenue website before you apply or renew.
1. Who regulates dealers in Alabama?
Alabama dealer licenses are issued and managed by the Motor Vehicle Division of the Alabama Department of Revenue.
- Regulator: Alabama Department of Revenue – Motor Vehicle Division
- Dealer license and dealer plates overview: Dealer License and Dealer License Plate Requirements – ALDOR
- How to obtain a dealer license: How do I obtain an Alabama Motor Vehicle Dealer License? – ALDOR FAQ
2. Who must be licensed?
Alabama law requires a dealer regulatory license for businesses that meet the state’s thresholds for selling vehicles. If you intend to sell vehicles as a business rather than occasionally selling your own personal vehicles, you should plan on obtaining a license.
In addition to the dealer license, most licensees are also required to become designated agents of the Department so they can process title and registration paperwork.
3. Business location and facility standards
Alabama requires a permanent business location suitable for operating a dealership.
- A permanent business office where customers can be served and records are stored.
- A display area or lot for vehicles offered for sale.
- A business sign displaying the dealership name, visible from the roadway.
- Zoning and local approvals where required by city or county authorities.
4. Business setup, $50,000 bond, and insurance
4.1 Entity and tax registration
- Form your business entity and register it with the appropriate state agencies.
- Obtain an Alabama sales tax number and a Federal Employer Identification Number (FEIN) if required.
4.2 $50,000 dealer bond
Alabama requires a continuous $50,000 surety bond for all dealer regulatory licensees. ALDOR notes that this bond also satisfies the designated agent bond requirement, so a separate designated agent bond is not needed.
- The bond must be filed with the Department of Revenue and kept in force as long as the license is active.
- Cancellation or lapse of the bond can result in license suspension or non-renewal.
4.3 Liability insurance
Dealers must maintain blanket liability insurance on all vehicles associated with the business. ALDOR publishes minimum coverage limits and may require proof of insurance before approving a license or issuing dealer plates.
5. Alabama dealer application process
The Alabama dealer license application is completed electronically:
- Set up access to the Alabama Partner Registration / MyDMV system.
- Gather your entity documents, tax registrations, and location details.
- Arrange your $50,000 dealer bond and required liability insurance.
- Submit the electronic dealer license application through MyDMV.
- Print the transmittal sheet generated by the system; it lists the supporting documents you must send to the Department (such as bond, insurance, and any additional forms).
- Mail or upload the required documents as instructed and monitor application status.
6. After approval: ongoing Alabama dealer compliance
- Renew your dealer license, bond, and insurance as required by ALDOR.
- Maintain your established place of business, including sign and display lot, in compliance with regulations.
- Stay current on sales tax filings and other Department of Revenue requirements.
- Follow all rules for dealer plates, temporary tags, title processing, and record retention.