How to Get an Arkansas Dealer’s License: Requirements and Costs

To meet the Arkansas dealer’s license requirements, you need to apply to the Arkansas State Police Used Motor Vehicle Division, pay a $250 annual fee, post a $25,000 surety bond, carry garage liability insurance at state minimums, run the business from a qualifying physical location, and have a full-time employee complete a three-hour pre-licensing course. A separate $50 sales tax permit from the Department of Finance and Administration is also required before you can sell.

Who Needs an Arkansas Dealer’s License

Arkansas law defines a used motor vehicle dealer as anyone who sells, brokers, exchanges, or leases used vehicles with the intent to make a profit, or who is in the business of buying and selling them. Selling or attempting to sell five or more used vehicles in a calendar year creates a rebuttable presumption that you are a dealer. Fewer than five sales does not automatically put you in the clear: a single sale made with clear commercial intent, such as buying a car to flip it, can still be treated as unlicensed dealing.¹

Selling without a license is a criminal offense in Arkansas, escalating from a Class A misdemeanor on the first violation to a Class D felony on the second, plus administrative fines of up to $1,000 per violation.² Get licensed before you start selling.

What You Need to Have Ready Before Applying

The State Police will not process an application that arrives with missing pieces. Line these up first:

A qualifying physical business location with signage, phone listing, and lockable record storage
A $25,000 corporate surety bond (or a $100,000 bond covering multiple locations)
Garage liability insurance meeting Arkansas minimums
Photographs of the location and sign
Names and addresses of every owner, partner, salesperson, and sales manager
A designated agent to receive legal process
Business phone number listed in an online directory in the dealership’s name
A full-time employee scheduled for the mandatory pre-licensing seminar
$250 application fee

Business Location Standards

You cannot operate from a home office or a P.O. Box. The State Police require a dedicated physical location used primarily for selling used vehicles, and inspectors verify it on site.³ The location must have:

A sign identifying the business as a used motor vehicle dealership, showing the dealership name, and visible from the nearest street or highway
A business phone number listed in the dealership’s name in an online directory such as yp.com or namesandnumbers.com
At least one lockable file cabinet or repository for business records

If you lease the property, keep a signed copy of the lease. You’ll need it when you register for a sales tax account.

Surety Bond and Liability Insurance

Every Arkansas dealer must post a corporate surety bond of at least $25,000, which pays retail buyers or the state up to that amount on a court judgment against the dealer for violating state law. Dealers running multiple locations can substitute a single $100,000 bond covering all sites.⁴ The annual premium depends on your credit; applicants with strong credit typically pay 1–3% of the bond amount, or roughly $250 to $750 a year for a $25,000 bond.

Garage liability insurance is also mandatory, at minimums set by the Arkansas Motor Vehicle Safety Responsibility Act:⁵

$25,000 for bodily injury or death of one person per accident
$50,000 for bodily injury or death of two or more people per accident
$25,000 for property damage per accident

Your application authorizes the State Police to verify your insurance at any time.⁶ If either the bond or the insurance lapses while you hold a license, the Director issues an automatic summary suspension without a hearing.⁷

Mandatory Pre-Licensing Education

Before your license is issued, a full-time employee of your dealership must attend a department-approved educational seminar lasting at least three hours.⁸ The attendee has to stay for the entire course; leaving early delays your license until the requirement is met, and failing to complete the training later can lead to suspension or revocation.⁷

What It Costs to Open

Beyond the $250 application fee for a primary location,⁹ budget for:

Dealer master plate: $100
Each additional dealer plate: $25¹⁰
Sales tax permit: $50, paid to the Department of Finance and Administration¹¹
Surety bond premium: roughly $250 to $750 a year for a $25,000 bond, more if your credit is poor
Garage liability insurance premium: varies by coverage and lot size

Satellite locations renew at $125 each.

How the Application Works

The application is only available through the Arkansas State Police website; printed copies are no longer stocked at the Used Motor Vehicle Division office.⁶ An owner of the dealership has to sign it, and the signature is verified by oath or affirmation under penalty of criminal prosecution for false statements.³

Submit the signed application with the location photographs, bond proof, insurance proof, ownership and staff lists, agent designation, and phone directory listing. Once the State Police review the file, a Used Motor Vehicle Division inspector contacts you to schedule an on-site inspection. At least one dealership owner must be present at that first visit. If the location passes, the inspector’s report goes to the Little Rock office and the license is emailed to you.³

Sales Tax Permit

Separately from the dealer’s license, you need a sales tax permit from the Arkansas Department of Finance and Administration. The permit costs $50, paid electronically when you submit the online application, and processing takes up to two weeks.¹¹ Any outstanding tax liabilities have to be cleared before a new permit will be issued. The address on your registration cannot be a P.O. Box, and if you lease the property, DFA needs a signed copy of the lease.

Keeping the License After You Get It

Renewal

The annual renewal fee is $250 for a primary location and $125 for a satellite location. An inspector visits roughly one month before your license expires, or during the expiration month, and the renewal cannot be processed until that inspection is complete.⁶ Renewal applications are given priority over new ones to avoid lapses in licensing and dealer tag validity.

Records

Licensed dealers must keep all business records, including vehicle transaction records and title documents, for at least five years, stored in the lockable file cabinet at the licensed location.¹² Inspectors check for this during site visits.

What Suspends the License

Several things trigger automatic summary suspension without a hearing: a lapsed bond or insurance policy, an unsatisfied court judgment against you that remains unpaid after 30 days, or ceasing business at your licensed location without notifying the Director in writing within ten calendar days.⁷ The ten-day notice rule catches dealers who relocate lots and forget the paperwork. Selling on a suspended license is a Class C felony, so file the notice.

The Director can also deny renewal, suspend, or revoke a license for material misstatements on the application, fraud or misrepresentation, incompetence or untrustworthiness, or any violation of the Used Motor Vehicle Buyers Protection Act.⁷

1
Arkansas Department of Public Safety. Used Motor Vehicle Buyers Protection Statute
2
Justia Law. Arkansas Code 23-112-603 – Penalty for Violation and Disbursal of Fines
3
Arkansas State Police. Requirements To Become A Licensed Arkansas Used Motor Vehicle Dealer
4
Justia Law. Arkansas Code 23-112-607 – Dealer’s License
5
Justia Law. Arkansas Code 27-19-713 – Motor Vehicle Liability Policy
6
Arkansas Department of Public Safety. Used Motor Vehicle Dealer License Application Form
7
Legal Information Institute. 015.01.22 Ark. Code R. 004 – Used Motor Vehicle Dealer Licensing
8
Legal Information Institute. Used Motor Vehicle Dealer Training Procedure
9
Justia Law. Arkansas Code 23-112-608 – License Certificate
10
Code of Arkansas Rules. 27 CAR 15-101 – Definitions
11
Arkansas Department of Finance and Administration. Register for a Tax Account
12
Code of Arkansas Rules. 23 CAR 358-1239 – Retention of Records