Georgia Auto Dealer License Guide

Learn how to become licensed as a Georgia auto dealer, and speak with an Single Source Insurance agent today about purchasing the bond you’ll need to operate as an auto dealer in Georgia. 

What Are the Different Types of Georgia Auto Dealer Licenses?

The main type of dealer license issued in Georgia is the used auto dealer license, also referred to as an independent dealer license. Franchise dealers may sell both new and used vehicles. Dealers don’t need a state-issued license, though they do have to register with the Motor Vehicle Division of the Georgia Department of Revenue and obtain a local business license.

The focus here is on becoming licensed as a used auto dealer by the State Board of Registration of Used Motor Vehicle Dealers & Used Motor Vehicle Parts Dealers, Used Motor Vehicle Dealers Division (UMVD for short).

What Are the Steps in the Licensing Process?

The steps you’ll need to take after establishing your dealership as a legal business entity include:

• Securing a permanent business location that meets local zoning requirements and passes a preliminary inspection by UMVD
• Purchasing garage liability insurance
• Purchasing a $35,000 Georgia auto dealer bond
• Attending a state-approved dealer training seminar
• Obtaining a sales tax number from the Department of Revenue
• Pre-registering for a fingerprint-based background check
• Completing the license application and submitting it, with all required supporting documents and payment of the application fee (currently $150 per location) to UMVD

Georgia used vehicle dealer licenses are good for two years and expire on March 31 of every even-numbered year.

Why is a Georgia Auto Dealer Bond Required?

Georgia auto dealer bonds are a type of license and permit surety bond because obtaining one is a prerequisite for licensure. When a dealer (known in the lingo of surety bonds as the “principal”) enters into the surety bond agreement with the Board (the “obligee” requiring the bond) and the bond’s guarantor (the “surety”), it establishes a legal binding contract among the three parties.

The bond is the dealer’s guarantee to operate in full compliance with all laws and regulations governing used auto dealing in Georgia. That guarantee legally obligates the principal to pay any valid claim filed against the bond by the obligee or a consumer for damages resulting from the principal’s unlawful or unethical business conduct. The bond must be renewed before its expiration date to ensure uninterrupted financial protection for the state and the public. Failing to maintain an active bond in force at all times can result in the loss of the principal’s dealer license.

How Are Georgia Auto Dealer Bond Claims Paid?

While the terms of a Georgia auto dealer bond obligate the principal to pay all claims the surety deems legitimate, in practice, the surety will issue payment to the claimant initially and be reimbursed by the principal at a later date. In effect, the surety’s payment of the claim on the principal’s behalf is an extension of credit to the principal—credit that must be repaid. The surety is indemnified against any responsibility for damages caused by the principal and can take legal action against the principal if not repaid.

How Much Does a Georgia Auto Dealer Bond Cost?

The cost of a Georgia auto dealer bond is the result of multiplying two factors: the $35,000 bond amount and the premium rate set by the surety for a given principal. The premium rate will reflect the underwriters’ assessment of the risk that the principal might not repay the surety for claims paid on the principal’s behalf. That risk assessment is based largely on the principal’s personal credit score, which is a measure of how responsibly the principal has managed credit in the past.

A high credit score means that the risk to the surety should be low, so the premium rate will also be low, perhaps less than one percent. A low credit score, on the other hand, is a warning sign of an elevated risk level, which warrants a higher premium rate—conceivably as high as ten percent or even higher.