To get a dealer license in Kentucky, you apply to the Kentucky Motor Vehicle Commission on form TC 98-1 after lining up a properly zoned lot, a $100,000 surety bond, the required liability insurance, your business registration, and a Kentucky sales tax permit. Once the Commission has a complete application, state law gives it 30 days to approve or deny you.1Justia Law. Kentucky Code 190 – 190.030 The pieces are not complicated individually, but they have to be in place before you file, and the license covers only one location and one type of selling.
Pick the Right License Type First
Kentucky issues separate licenses for different kinds of vehicle sales, and the one you choose dictates what you can do.2Justia Law. Kentucky Code 190 – 190.010 A used motor vehicle dealer license is the common one for independent lots. New vehicle dealers sell under a manufacturer franchise. Wholesalers sell only to other licensed dealers. Separate categories cover auction dealers, motorcycle dealers, leasing dealers, new recreational vehicle dealers, and restricted dealers (specialized vehicles like funeral coaches and emergency vehicles, or automotive recyclers who dismantle for parts).
Each category requires its own application and covers only the activity described. If you want to run a used lot and also auction cars, that is two licenses. If you open a second lot, that is another license, because every license is tied to one location.1Justia Law. Kentucky Code 190 – 190.030
Who Qualifies and Where You Can Operate
You must be at least 18 and willing to authorize a criminal background check. The Commission can refuse a license for financial or moral unfitness, a materially false application, or a history of fraudulent vehicle transactions.3Justia Law. Kentucky Code 190 – 190.040
Your lot has to be real: a permanent structure with a dedicated office for sales and records, a vehicle display area, and permanent signage with the dealership name. The property must be zoned for automotive sales before you apply. This is where applicants most often get stuck. Call your local planning or zoning office before you sign a lease, because rezoning can take months and sometimes fails.
If a corporation or partnership will operate under an assumed name, file the assumed-name certificate with the Kentucky Secretary of State and the county clerk, and include a copy with your application.4Kentucky Motor Vehicle Commission. Application for Motor Vehicle Dealer License
Surety Bond and Insurance
Kentucky requires a surety bond of at least $100,000 for every dealer license type.4Kentucky Motor Vehicle Commission. Application for Motor Vehicle Dealer License The Commission can set a higher amount for auction dealers. You do not hand over $100,000; you buy the bond from a surety company and pay an annual premium that typically runs a few percent of the face value, depending on your credit and finances. The bond pays out if you defraud a buyer, fail to deliver a title, or otherwise cause financial harm.
Separately, you must carry liability insurance with minimums of $250,000 per person for bodily injury or death, $500,000 per accident, and $250,000 for property damage.5Kentucky Legislative Research Commission. Kentucky Revised Statutes 190.033 The policy has to cover any vehicle you own or offer for sale while you, your employees, or test-driving customers are behind the wheel. Automotive recycling dealers carry commercial general liability at the same dollar thresholds.
The Application
The application is form TC 98-1 from the Kentucky Motor Vehicle Commission. Along with the form, assemble:
- A financial statement, which the Commission reviews and which may support the bond.
- Business registration documents: Articles of Incorporation or Organization filed with the Kentucky Secretary of State, plus any assumed-name certificates.
- A Kentucky sales tax permit from the Department of Revenue.
- Proof of the required liability insurance.
- Zoning certification from local authorities.
You will also need a Federal Employer Identification Number from the IRS, which is free online. Expect a physical inspection of the lot as part of approval.
Submit the full package to the Commission. State law gives the Commission 30 days from receipt of a complete application to grant or deny the license. If anything is missing, the clock does not start, so leaving a gap is the same as adding weeks to your timeline. License fees are set by administrative regulation and capped by statute at $500 per year.1Justia Law. Kentucky Code 190 – 190.030
Salesperson Licenses You’ll Also Need
The dealer license by itself does not let anyone sell cars for you. Kentucky requires a separate salesperson license for each person who sells vehicles at your dealership, and the definition reaches further than most new owners expect: the dealer license holder personally, the president or CEO of a corporate dealer, each general partner, and each manager or active member of an LLC.6Kentucky Legislative Research Commission. 605 KAR 1:051 Every licensed location must have at least one licensed salesperson on site.
The employing dealer applies for each salesperson through an online account at Ky.gov. The Commission can order a criminal background check, which the dealership pays for. A salesperson working at two of your lots needs a license for each one.6Kentucky Legislative Research Commission. 605 KAR 1:051
Keeping the License Active
Every Kentucky dealer license expires on December 31, no matter when it was issued.1Justia Law. Kentucky Code 190 – 190.030 Renew by submitting a renewal application and the annual fee before the expiration date. If your bond or insurance lapses, the Commission can suspend you, so keep both in force year-round.3Justia Law. Kentucky Code 190 – 190.040
You must keep accurate records of every purchase, sale, and transfer, including odometer disclosure statements. The Commission can inspect those records, and gaps in them are a fast path to enforcement.
Advertising Rules
Every ad has to identify your dealership by the exact name on your license. Any specific vehicle you advertise must be in your possession and available at the advertised price; promoting a car you do not have in stock without saying so is bait advertising. All material terms, conditions, and disclaimers have to be “clear and conspicuous,” meaning readily noticeable by size, placement, or other features.7Kentucky Legislative Research Commission. 605 KAR 1:191 False or misleading advertising is a standalone ground for revocation.3Justia Law. Kentucky Code 190 – 190.040
What Can Cost You the License
Selling vehicles in Kentucky without a license, or violating the dealer licensing statutes, carries a fine of $25 to $500, up to 30 days in jail, or both. Odometer fraud carries $5,000 per violation, recoverable by the Attorney General. Willfully filing a false statement about the price paid for a vehicle on a tax document is a Class D felony with a minimum $2,000 fine per offense.8Justia Law. Kentucky Code 190 – 190.990
On the administrative side, the Commission can deny, suspend, or revoke your license for defrauding a buyer, failing to honor a written agreement, making fraudulent sales, or using deceptive practices in repossessions or financing. A materially false tax return, certified by the Department of Revenue, is also a basis for revocation.3Justia Law. Kentucky Code 190 – 190.040
Federal Rules That Apply Once You Open
Your Kentucky license handles state requirements, but it does not relieve you of federal obligations that attach the day you start selling. If you sell used vehicles, the FTC’s Used Car Rule requires a Buyers Guide posted in plain view on every car, identifying the vehicle and disclosing whether it is sold “as is” or with a warranty; the guide becomes part of the sale contract.9Federal Trade Commission. Dealer’s Guide to the Used Car Rule Any cash transaction over $10,000, or related transactions totaling over $10,000, triggers IRS Form 8300 within 15 days.10Internal Revenue Service. Report of Cash Payments Over $10,000 Received in a Trade or Business – Motor Vehicle Dealership Q&As Dealers who arrange financing or run credit are financial institutions under federal law, which pulls them into the Gramm-Leach-Bliley Privacy Rule and the FTC’s Safeguards Rule, including a written information security program with a designated program officer.11Federal Trade Commission. Automobile Dealers – FTC’s Safeguards Rule Frequently Asked Questions Build these into your operation before your first sale, not after.