If you have the knack for buying and selling cars for a profit, you may have thought about doing it full time. Maybe you're a mechanic and are able to find undervalued cars, fixing them up and selling them for a profit. However, if you are making money, you may need a license. The following are a few things that you should know about an auto dealer license.

You may need a license without realizing it

If you have sold a few cars, but are only doing this one at a time, and you can park them in front of your home or in your driveway, you may still need a license. Even if you hold the title to the cars, you may be limited in how many you can sell without a license. Because laws vary from one state to another, you need to check with the Department of Motor Vehicles for your state.

Decide which license in your state applies best to you

Most states have different types of dealer licenses. If you plan on selling used cars at the retail level, then this is the license for you. However, it should be noted that there is usually a separate license for selling wholesale, as well as for selling new cars and motorcycles. Some states may issue a rebuilder license for those who are upgrading or fixing up a vehicle for resell.

There are several things required of you

There are usually several forms you will need to fill out, and there will be documentation that you will need to include. Many states will require you to be fingerprinted and undergo a background check. And because you are operating a business, the city or county will require you to have a business license, in addition to your auto dealer license.

You will need a bond

This is to protect the public from a loss of money due to your negligence or other issues that may harm the customer. The amount of the bond that is required will be set by your state's law. You will not have to post the entire amount. A surety bond company will post most of this. You will only pay a percentage of the total, depending upon your personal credit score. Those with excellent credit will often pay a percentage in the low, single digits. Those with only fair credit may pay a percentage of the bond that reaches double digits. You can get quotes from more than one bond company.

Take your time and make sure you understand all the requirements for an auto dealer license. Make sure you have all of the paperwork filled out completely, and you are ready to purchase the proper surety bond per your state's requirement. Once you get your license, you will be an official auto dealer.