South Carolina Auto Dealer License Guide

Learn how to become licensed as a South Carolina 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 South Carolina. 

What Are the Different Types of South Carolina Auto Dealer Licenses?

South Carolina’s Department of Motor Vehicles seven different types of dealer licenses:

• Motor vehicle dealer
• Motor vehicle wholesaler dealer
• Motor vehicle wholesaler auction dealer
• Motorcycle dealer
• Motorcycle wholesaler
• RV dealer
• Temporary RV dealer

The most common of these is the motor vehicle dealer license, which permits the retail sale of new and/or used vehicles.

What Are the Steps in the Licensing Process?

The following is an overview of what you’ll need to do in applying for a South Carolina motor vehicle dealer license.

• Obtain a Federal Employer Identification Number from the IRS.
• Obtain a sales tax ID number from the South Carolina Department of Revenue.
• Establish a permanent business location.
• Complete a state-approved pre-licensing course.
• Purchase liability insurance and, if applicable, Workers’ Compensation insurance.
• Authorize a Criminal History report from the South Carolina Law Enforcement Division.
• Purchase a $30,000 South Carolina auto dealer bond.
• Complete the motor vehicle dealer license application.

Mail the completed application, along with all required supporting documents and payment of the license and application fees, to the South Carolina DMV, Dealer Licensing and Audit Unit. You will receive your license once your application has been processed and your business location has passed a site inspection if one is required.

Why is a South Carolina Auto Dealer Bond Required?

Purchasing a South Carolina auto dealer bond obligates a licensed dealer to comply with all applicable state laws and regulations governing motor vehicle sales in South Carolina.  The bond protects the state and consumers against financial losses caused by a dealer’s unlawful or unethical business practices. Those harmed financially by a dealer’s violation of the terms of the surety bond agreement can file a claim and be compensated for their loss.

How Are South Carolina Auto Dealer Bond Claims Paid?

The surety bond agreement establishes a contract that is legally binding for all three parties: the “obligee” (the state of South Carolina), the “principal” (the dealer), and the “surety” (the bond’s guarantor). The legal obligation to pay claims belongs solely to the principal, but the payment of claims is guaranteed by the surety. Therefore, the surety expedites matters by paying a claim initially and is repaid later by the principal. A principal who does not repay that debt may be subject to legal action by the surety.

How Much Does a South Carolina Auto Dealer Bond Cost?

The annual premium cost of a South Carolina auto dealer bond is a very small percentage of the required bond amount. That percentage is the premium rate, which is set by the surety for each bond applicant through an underwriting process. The aim of that underwriting process is to assess the risk of the surety not being repaid for claims paid on the principal’s behalf. That assessment leans heavily on the principal’s personal credit score as a risk indicator.

A high credit score suggests low risk, and vice versa. Low risk is rewarded with a low premium rate, while high risk warrants a high premium rate. While most with good credit will pay a premium rate in the range of one to three percent, those with excellent credit may be assigned a premium rate below one percent and those with a higher credit could pay a premium rate of ten percent or more.