New car dealers (and used branches of new car dealerships) in Arkansas are licensed differently than used car dealers. In December, the Single Source Insurance blog went over how to get a used auto dealer license in the state; keep reading to learn about new car dealer licensing.
Getting licensed as an auto dealer
The Arkansas Motor Vehicle Commission issues new car dealers’ licenses, and requires them to submit an application plus a $100 licensing fee. Here’s some of the information applicants will need to provide:
- Indicate whether business location is leased or owned
- Description of facilities, including building, showroom, and lot square footage and dimensions
- Business information including DBA, mailing address, contact person, and email
- Makes of all vehicles that will be sold
- $50,000 surety bond
- Proof of adequate liability coverage
- Pictures of showroom, lot, building, sign, and all departments
- Applications for any salespersons plus $15 fee per application
- Contact information for several dealership employees, including a renewal contact and the general manager
The Commission has created a dealer procedure packet that all new car dealers should read thoroughly before submitting their application. Note that new dealer applications need to be accompanied by a letter from the manufacturer stating their intent to establish the franchise.
Licenses expire on December 31 and need to be renewed annually. The license renewal application requires a $100 fee, or $25 for a new dealer’s used branch. The same rules apply to any salesperson licenses, and their renewal fee is $15.
New car dealer surety bonds
One goal of the Motor Vehicle Commission is to protect consumers from unethical and unfair business practices, and a surety bond is one of the ways they do that. When new car dealers purchase and sign the surety bond (found on page six of the application), they are agreeing to follow the state’s laws for their license. Section 23-112-308 of Subchapter 3 the Commission’s Laws details violations that can result in license suspension, revocation, and in some cases, civil or criminal penalties.
Violations like those could also result in claims being made against the dealer’s surety bond. Should a claim be proven, the surety pays the claim up to the bond’s full amount. However, the new car dealer must reimburse the surety bond for that claim. Since new car dealers no doubt want to avoid paying out expensive claims, not to mention hang onto their business license, the bond is a deterrent to shady business practices.