| License Description |
Minnesota Department of Public Safety (DPS) How to Become a Licensed Minnesota Dealer
Who must have a dealer license?
- Anyone engaged in the business of leasing, selling or arranging the sale of motor vehicles (new or used)
- Anyone who has leased or sold more than five vehicles, wholesale or retail, in a twelve month period
- Anyone in the business of selling used vehicle parts, or processing and selling scrap metals acquired from vehicles
- Anyone who conducts consignment sales or arranges sales or leases
Zoning
- Any type of dealership is considered a commercial operation. Consequently, dealerships are required to be in a commercial location.
- In agricultural and industrial areas, zoning officials may consider issuing special use permits for a commercial operation.
Commercial Building
A permanent, enclosed building that is on a permanent foundation, connected to local sewer and water facilities, or otherwise complying with local sanitary codes, adapted to commercial use and conforming to local government zoning requirements. This may include strip office malls or garages if a separate entrance and a separate address is maintained and the dealership is clearly identified as a separate business.
Do not file an application until the location meets all the necessary requirements listed on the checklist
- Failure to meet the requirements or any misstatement on the checklist will result in the denial of the dealer license
- Any applicant denied a dealer license must wait one year to reapply (Minn. Stat. § 168.27, subd. 11)
- Used license applicants are encouraged to submit photos of the commercial building, designated display lot, and exterior sign.
Note: Please be aware that while you may meet state requirements for dealer licensing, other city, county, state or federal regulations may govern your business (for example, you may need zoning approval or a city license in order to do business). Contact your local unit of government.
A separate license is required if the dealer is selling in a city with less than 100,000 population, outside the seven-county metro area.
Dealer License Types
Auction Vehicle Dealer
- A licensed motor vehicle auctioneer is entitled to sell at auction or advertise and solicit the sale at auction of used motor vehicles belonging to others
- A license is not required for an auction where the inclusion of motor vehicles is incidental* to the disposal of business or estate assets (Minn. Stat. § 168.27, subd. 5a)
*Incidental means up to a total of ten vehicles; no more than ten percent of the items in the posted auction bill are motor vehicles.
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Broker Dealer
- Arrange the sale or lease of new or used motor vehicles between a buyer/lessee and a seller/lessor
- Advertise and solicit the brokering of new or used motor vehicles
- Negotiate or quote the sale price or lease terms of motor vehicles
- Prepare and deliver documents necessary to the transaction
- Accept a down payment not to exceed $500. Full payment may be accepted if the payment is in the form of a negotiable instrument payable to the vehicle dealer. Accompany a purchaser or lessee at the time of delivery by the selling dealer
- Be present when the selling dealer describes warranties and safety features at time of delivery
Note: A motor vehicle broker shall not engage in the business of selling new or used motor vehicles.
Delivery of New Vehicles Sold Through a Broker
If a new motor vehicle dealer agrees to sell or lease a new motor vehicle using the services of a motor vehicle broker, the new motor vehicle dealer may not refuse to deliver possession of the vehicle to the buyer or lessee, provided that all arrangements are properly completed for payment, insurance, titling, transfer and registration of the new vehicle and any trade-in vehicle.
Delivery may take place at or away from the dealership.
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DSB - Dealer of Motorized Bicycle, Boat and Snowmobile Trailers
- Sell only moped/motorbikes, and boat, snowmobile and small horse trailers (24,000 pounds vehicle weight or less). If you sell other types of motor vehicles, a regular license (appropriate to the inventory being sold) is required.
- Sell boat, snowmobile and other utility trailers; you are not required to have a franchise agreement on file for these types of trailers.
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Lessor
- Lease or rent new and used vehicles; solicit and advertise the lease or rental of new and used vehicles. This includes both long-term leasing and short-term rental. Vehicles must be leased for a minimum of 120 days or the dealer owes sales tax on the vehicle purchase price (Minn. Stat. § 297B.035, subd, 3).
- A motor vehicle lessor may sell vehicles returned after lease termination or expiration, without a used dealer license.
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Limited Use Vehicles
A limited used dealer license may be issued to a non-profit charitable organization whose primary business is to raise funds for the corporation through the sale of donated vehicles. These organizations must qualify for tax exemption under Internal Revenue Code 501( c )(3). Under this license the organization:
- May take in vehicles on donation
- Must sell vehicles through a licensed dealer or auctioneer. The organization is allowed to reassign the vehicle on the title
- May donate vehicles to private party with a gift affidavit. The organization is responsible for the title transfer
- Does not qualify for dealer plates (demonstration or in-transit plates)
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New Vehicle Dealer
- Sell, wholesale, broker or auction new motor vehicles covered by their franchise,* and used motor vehicles of any make.
- Solicit and advertise the sale, brokerage, wholesale or auction of new motor vehicles covered by their franchise,* and used motor vehicles of any make.
- Lease all makes of new motor vehicles.
If a dealer is not franchised for a particular make, they must lease the vehicle for a minimum of 120 days or the dealer owes sales tax on the vehicle purchase price (Minn. Stat. § 297B.035, subd, 3).
- Broker leases without having a separate broker license.
- Operate as a salvage pool; you must be also licensed as a used vehicle parts dealer to acquire a junked vehicle from a salvage pool, insurance company or its agent.
*A current valid franchise for each type of new vehicle must be on file with the Dealer Licensing Unit prior to the sale.
Note: If a separate company or corporation owned by a new motor vehicle dealer engages in the business of leasing motor vehicles, a separate lessor license is required.
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Salvage Pool Vehicles
- Store and display damaged or junked vehicles for sale as an agent or escrow agent of an insurance company
- Solicit and advertise the storage and display of damaged or junked vehicles for sale as an agent or escrow agent of an insurance company
- Sell junked vehicles to licensed used parts dealers only
Note: A used or new motor vehicle dealer may operate as a salvage pool but must be licensed as a used vehicle parts dealer to acquire a junked vehicle from a salvage pool, insurance company, or its agent.
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Scrap Metal Dealer
- Can acquire hulks* for the purpose of processing and selling the metal for remelting
- Cannot acquire a junked vehicle for the purpose of dismantling and selling used vehicle parts and remaining scrap metals unless the dealer is also licensed as a used vehicle parts dealer
*A hulk is a motor vehicle that is incapable, under its own power, of moving and is incapable of transporting persons or property and has had any valuable parts removed.
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Used Parts
- Licensed used vehicle parts dealers are entitled to buy or acquire vehicles for the purpose of dismantling the vehicle and selling used parts and the remaining scrap metals.
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Used Vehicle Dealer
- Sell, lease, wholesale, broker, or auction used motor vehicles
- Solicit and advertise the sale, lease, wholesale, broker or auction of used motor vehicles
- Buy or acquire vehicles for dismantling and to sell used parts and remaining scrap metal. However, a used vehicle parts dealer license is required to acquire a junked vehicle from a salvage pool, insurance company, or its agent.
What is a Used Vehicle?
Before a motor vehicle is considered used, the following criteria must be met: A certificate of title must be issued for the vehicle. The vehicle must be licensed with full registration tax paid.
Motor vehicle sales tax must be paid, or sales tax paid on a lease of at least 120 days.
The vehicle must be placed in actual operation; sold to a retail buyer and not held for resale by a dealer.
If a new or used motor vehicle dealer buys a new vehicle that they are not franchised to sell, they must title the vehicle in their dealership name. Full registration tax and sales tax on the vehicleâ??s purchase price must be paid.
The dealer is then entitled to use their demonstration plates on the vehicle.
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Motor Vehicle Wholesaler
- Sell and advertise or solicit the sale of motor vehicles to licensed motor vehicle dealers for resale
- Sell new vehicles only to dealers franchised to sell the particular make of the vehicle
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