Who needs a dealer’s license?
In the state of Iowa, you are required to have a vehicle dealers license, if you are engaged in or advertise being “engaged in the business” of doing any of the following acts for the purpose of the sale of motor vehicles to the public:
- Accepting on consignment
- Conducting a retail auction
- Acting as an agent for the purpose of doing any of those acts
A person selling more than six motor vehicles during a twelve-month period may be presumed to be “engaged in the business” and would be required to obtain a dealer’s license from the Iowa Department of Transportation.
What are the minimum requirements needed for my Place of Business?
- An office with a landline telephone answered and listed in your dealership name where you maintain regular business hours and the public can contact you. Regular business hours are a minimum of 32 hours, Monday through Friday where the office is staffed during these hours. Dealers selling motorcycles exclusively are not required to maintain regular business hours.
- A repair facility with minimum space to repair and recondition one or more motor vehicles with adequate access, equipment, and tools for repairing and reconditioning motor vehicles sold by the dealer. The interior walls and ceiling shall separate the repair shop from any area occupied for salesroom, display area, or offices by floor-to-ceiling walls and solid, full-length doors. The minimum space for repair to motorcycles and motorized bicycles shall be an unobstructed rectangular area measuring no less than 10 feet by 15 feet. The minimum space for the repair of other motor vehicles shall be an unobstructed rectangular area measuring no less than 14 feet by 24 feet.
- A display facility:
- New motor vehicle dealers are required to have a suitable space in a building, at the principal place of business, reserved for display purposes where motor vehicles may be viewed by prospective buyers. The minimum space for the display of motorcycles and motorized bicycles shall be 10 feet by 15 feet. The minimum space for the display of other vehicles shall be 18 feet by 30 feet.
- Used motor vehicle dealers and new motor vehicle dealers selling new trucks or new motor homes exclusively are required to have a suitable space in a building, at the principal place of business, meeting the requirements for a new motor vehicle dealer or an outside area, at the principal place of business with an all-weather surface which shall be reserved for the display of motorcycles and motorized bicycles shall be 10 feet by 15 feet, exclusive of the parking area. The minimum space for the display of other vehicles shall be 18 feet by 30 feet, exclusive of the parking. (All-weather surface does not include grass or exposed soil.)
What documentation needs to be sent to the Iowa DOT in order to get a Dealer License?
- Application for Motor Vehicle or Towable Recreational Vehicle Dealer License
- Fees for Dealer License Application along with payment for fees owed.
- Bond: A $75,000 surety bond must be filed with the Iowa DOT. This can be obtained through your insurance agent or an Iowa-licensed bonding company.
- Zoning letter: Written evidence, issued by the office responsible for the enforcement of zoning ordinances in the city, town, or county where the place of business is located that states the place of business is in compliance with all applicable zoning provisions.
- Franchise: If you are dealing in new makes of motor vehicles, you must be enfranchised by the manufacturer or distributor of each make and able to provide a copy of the franchise.
- On-site inspection: Prior to licensing, you will need to contact the Bureau of Investigation & Identity Protection to schedule an appointment for an on-site inspection of your facilities. Ensure you are completely compliant with “place of business” requirements, prior to contacting us (see "the requirements needed for my place of business" section above).
What else is required prior to Dealer License issuance?
- Used motor vehicle dealer education class:
All used motor vehicle dealer license applicants are required to attend an 8-hour Auto Dealer Pre-Licensing Education Class, prior to submitting their dealer license application. The class is scheduled with and managed by the Iowa Independent Automobile Dealers Association(IIADA). At least one individual associated with the used motor vehicle dealer as an owner, principal, corporate officer, director or member, or partner of a limited liability company or limited liability partnership must complete the required education course. The certification is required of all used motor vehicle dealers with the following exceptions.
Get information about class schedules, locations, and fees.
- Motor vehicle rental companies having a national franchise
- National motor vehicle auction companies
- Wholesale dealer-only auction companies
- Used car dealerships owned by a franchised motor vehicle dealer
- Banks, credit unions, and savings and loan associations
It is your responsibility to ensure the corporation complies with all applicable state requirements for incorporation.
- Financial responsibility:
It is your responsibility to ensure the dealership is in compliance and has in force financial liability coverage. Financial liability coverage shall be in the limits of not less than $100,000 because of bodily injury to or death of one person, $300,000 because of bodily injury or death of two or more persons in any one accident, and $50,000 because of injury to or destruction of property of others in any one accident.
When would a restricted dealer license be issued?
You would apply for a restricted dealer license if you are doing any of the following:
- Selling only those motor vehicles solely through an option to purchase in lease agreements.
- Selling only those vehicles repossessed or acquired by a lien, title retention instruments, or security contracts.
- Fleet vehicle sale.
- Auction only.
- Insurers selling vehicles of a type subject to registration, solely for the purpose of disposing of vehicles acquired as a result of a damage settlement or recovered stolen vehicles acquired as a result of a loss settlement.
Restricted dealers must have a business location in Iowa. A restricted dealer license does not require a “place of business” as defined in Iowa Code Chapter 322. Dealer plates are available. Extension lot licenses are not issued to restricted dealers.
What license do I need to lease vehicles?
A leasing license is required if you are leasing cars for longer than 60 days. A separate application must be completed and can be obtained from our office.
Will the Iowa DOT review my sales paperwork after I become a dealer?
The Bureau of Investigation & Identity Protection conduct random audits on licensed dealers and recyclers to ensure compliance with Iowa laws and administrative rules. Title paperwork, disclosures, and receipts will be reviewed for current inventory as well as prior sales by the licensee. Violations can result in warnings, administrative action, and/or criminal charges being filed.
What if I sell too many vehicles and continue to operate as an unlicensed dealer or recycler (Curbstoning)?
Iowa law requires a person selling and/or rebuilding for resale more than six motor vehicles during a twelve-month period to be licensed by the Iowa Department of Transportation. Failure to obtain a license while selling more vehicles than allowed by Iowa law is a violation of Iowa law and may result in criminal charges being filed by the Bureau of Investigation & Identity Protection.
How do I file a COMPLAINT?
If you have a complaint against a licensed or unlicensed dealer or recycler, you may file a written complaint with us by completing a complaint form and providing copies of all the paperwork from the vehicle transaction.
If you would like to discuss a potential complaint or have questions, please email your local investigator. Please include copies of your paperwork with the email.