How to Get an Alabama Wholesale Dealer License: Bond and Plates

To work as a wholesaler in Alabama, you need a Master Dealer License from the Alabama Department of Revenue (ALDOR). The application costs $125, requires a $50,000 continuous surety bond and blanket liability insurance, and must be filed electronically through ALDOR’s Alabama Partner Registration Portal.¹ Every license runs October 1 through September 30, so plan your timing around that cycle.²

Who Needs This License

Alabama defines a motor vehicle wholesaler as anyone in the business of buying, selling, or exchanging motor vehicles at wholesale to other licensed dealers, not to the public.³ No one can operate as a wholesaler without first obtaining the license.⁴

The five-vehicle threshold you may have read about does not apply to wholesalers. That number is part of the retail used motor vehicle dealer definition.³ If you sell vehicles to other dealers as a business, you need the license regardless of volume.

The Master Dealer License is one license that covers multiple roles. A used motor vehicle dealer license also authorizes wholesale and rebuilder activity. A new motor vehicle dealer license covers all four categories. A standalone wholesale license covers wholesale only.

Business Location Requirements

You need a permanent building or structure that serves as your office, where you receive mail, keep records, and conduct business, with an operable telephone listed under the business name or owner’s name.² The location must be properly zoned for business, and every supplemental location must be zoned and listed on the application too.⁵

Wholesalers who are not also operating as new or used dealers get two meaningful breaks compared with retail dealers. You do not need a public-facing sign visible from the street, and you can keep your books and records at home, even in a space adjacent to your residence. All records still have to be accessible to ALDOR inspectors during normal business hours.²

Surety Bond

Before you apply, obtain a $50,000 continuous surety bond executed by a surety company authorized to do business in Alabama. “Continuous” means it stays in force until the surety cancels it. If ALDOR receives a cancellation notice and you have not replaced the bond before the cancellation date, your license and designated agent status are revoked immediately.⁶

The bond protects the state and consumers if you fail to comply with Alabama’s motor vehicle laws, and it satisfies the bonding requirement for your role as a designated agent of ALDOR. Pricing from a surety company is usually driven by your personal credit.

Liability Insurance

Every licensed dealer must carry blanket motor vehicle liability insurance covering all vehicles owned by the business, with coverage amounts that meet or exceed the minimums under Alabama’s Motor Vehicle Safety-Responsibility Act.⁷ Those minimums are $25,000 for bodily injury per person, $50,000 for bodily injury per accident, and $25,000 for property damage per accident. A combined single limit of $75,000 per accident also satisfies the requirement. Proof of coverage goes in with your application, and a lapse can trigger suspension or revocation.

How to Apply

Applications are filed electronically through the Alabama Partner Registration Portal on ALDOR’s website.¹ The online form asks for your legal business name, trade names, physical address, and form of organization (individual, partnership, LLC, LLP, or corporation). For every owner, partner, member, officer, and director, you provide name, home address, phone number, driver’s license or non-driver ID number, state of issuance, and Social Security number. You also provide your Federal Employer Identification Number unless you are applying as a sole proprietor, plus your surety bond number and liability insurance policy details.⁵

Supporting documents go in with the application:

The executed surety bond.
Proof of blanket liability insurance.
Copies of driver’s licenses or non-driver IDs for all owners, partners, members, officers, and directors.
Photographs of your business location showing the building, any signage, and the vehicle display area. Submit photos for each supplemental location.⁵

The application fee is $125. Each supplemental location adds $5.⁵ After ALDOR reviews everything, the department issues a license with a unique number and notifies you electronically.

Renewal and Late Penalty

Every Master Dealer License is valid for one year starting October 1 and expires September 30, regardless of when it was originally issued. Renewal opens October 1.² You have a 30-day grace period through October 31. After that, ALDOR adds a 15 percent penalty on the license fee.⁵

Renewal costs the same $125 as the initial application. Your bond and insurance must stay active and current throughout the license year, and you must notify ALDOR of changes to your business location or ownership.

Dealer Plates and the Wholesale-Only Limit

Alabama limits dealer plates to new and used motor vehicle dealers who hold both a Master Dealer License and the appropriate county dealer license. A used dealer can purchase up to 10 plates; a new dealer can buy up to 35; dealers who processed 300 or more title transfers in the previous license year can purchase up to 25 additional plates.⁸ If you hold a wholesale-only license without also being licensed as a new or used dealer, you may not be eligible for dealer plates under the current statute. Confirm eligibility with ALDOR before counting on them.

FTC Used Car Rule

Wholesale dealers who sell exclusively to other licensed dealers at auctions closed to consumers are exempt from the FTC’s Used Car Rule, which otherwise requires a Buyers Guide on every used vehicle. That exemption disappears the moment the auction is open to the public, and at any public auction both the dealer and the auction company must comply with the Buyers Guide requirement.⁹ If any part of your operation touches a consumer-facing sale, the full disclosure rules apply.

Ongoing Obligations Once Licensed

A licensed dealer in Alabama is automatically a designated agent for ALDOR, responsible for processing title applications on the vehicles sold. Within 60 days of establishing your designated agent account, you must obtain authorization to use ALDOR’s online title system or your designated agent status is revoked.¹⁰ You cannot process title applications on behalf of another dealer unless both dealerships share the same ownership.

You must also keep a record of every vehicle bought, sold, or exchanged for five years, open to inspection by ALDOR and law enforcement during reasonable business hours. Each record includes the buyer’s and seller’s full name and street address (no P.O. boxes), the vehicle’s year, make, model, series number, VIN, and body type, the transaction date, and a statement noting any altered, defaced, or obliterated VIN.¹¹

1
Alabama Department of Revenue. Dealer Licenses and Dealer License Plates
2
Alabama Legislature. Alabama Code 40-12-392 – License – Applications
3
Alabama Legislature. Alabama Code 40-12-390 – Definitions
4
Alabama Legislature. Alabama Code 40-12-391 – License – Generally
5
Alabama Administrative Code. Alabama Administrative Code 810-5-12-.01 – Application For Master Dealer License
6
Alabama Administrative Code. Alabama Administrative Code 810-5-12-.02 – Motor Vehicle Surety Bond
7
Alabama Administrative Code. Alabama Administrative Code 810-5-12-.05 – Evidence of Blanket Liability Insurance Coverage for Licensed Motor Vehicle Dealers
8
Alabama Legislature. Alabama Code Title 40 Revenue and Taxation 40-12-264
9
Federal Trade Commission. Dealer’s Guide to the Used Car Rule
10
Alabama Administrative Code. Alabama Administrative Code 810-5-75-.36 – Responsibilities of Designated Agents
11
Alabama Administrative Code. Alabama Administrative Code 810-5-75-.42 – Dealer Designated Agent Records