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All state guides Massachusetts dealer license

How to get a used car dealer license in Massachusetts

Your city or town licensing authority issues the Class 2 used car dealer's license under state law, and you post a $25,000 bond with it. Dealer plates are a separate application to the Registry of Motor Vehicles, with a State Police site visit.

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  • Checked October 2026
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License
Class 2 used car dealer's license
Surety bond
$25,000
State fee
Up to $200 a year, set locally
Pre-license course
Confirm with the agency
Background check
Local suitability review
License term
Expires January 1 each year
What the state asks for

Massachusetts dealer license requirements

The figures a first-time used car dealer needs before applying to your city or town. Each row shows how well it is supported.

Surety bond
$25,000Official source

A surety bond or, if the local authority allows it, a certificate of deposit or irrevocable letter of credit of the same value. You need a separate bond for each business name and each city or town.

State license fee
Up to $200 a year, set locallyOfficial source

Each city or town sets its own license fee, capped by state law at $200. Melrose, for example, charges $150. The RMV charges nothing to apply for dealer plates, then $100 a year plus $20 per plate.

Pre-license education
Confirm with your city or townConfirm with the agency

The state licensing statute and the RMV dealer plate rules list no pre-licensing course or exam. Licensing is local, so ask your city or town whether it adds a requirement of its own.

Background check
Local suitability reviewOfficial source

The local authority must be satisfied, after investigating your application, that you are a proper person to run the business. State law does not spell out the checks, so the steps vary by city or town.

Insurance
Insurance stamp for dealer platesOfficial source

Before the RMV issues dealer plates, your insurer must stamp the Registration Application Card. The RMV's dealer registration page lists no coverage limits, so confirm them with your agent.

Business location
Office 100 sq ft, lot, sign, 30 hrsOfficial source

For dealer plates the RMV wants a permanent building that is not a residence, an office of at least 100 square feet, a display area your license authorizes, customer parking, an exterior sign and 30 public hours a week.

License term and renewal
Expires January 1 each yearOfficial source

Every Class 2 license expires on the January 1 after it is issued, whatever month you received it, and is renewed with the city or town. The RMV dealer registration and plates also carry an annual fee.

Sales allowed without a license
More than 3 in 12 months = dealerOfficial source

The licensing statute covers anyone in the business of selling used vehicles and names no number. The used vehicle warranty law treats a person who sold more than 3 used vehicles in the past 12 months as a dealer.

Processing time
Plates: 4 to 10 weeks (RMV)Official source

The RMV says the dealer plate process should take no more than 4 to 10 weeks from application to plates. The local license comes first, and its timing depends on your city or town.

“Official source” means the state agency’s own page, form or law. Where the state’s sources did not settle a point, the row says so instead of showing a guess.

Who issues the license

City or town licensing authority (Class 2 license); Massachusetts Registry of Motor Vehicles, Section 5 Division (dealer plates)

License you apply for

Class 2 used car dealer's license

Official licensing page

A packet from another town is only an example

Each municipality writes its own Class 2 application. Melrose's 2026 packet asks for a $150 fee, a certified plot plan, sign-offs from fire, police and inspectional services, and attendance at a City Council committee meeting. Another city or town can ask for different things. State law fixes only the $25,000 bond, the $200 fee cap and the January 1 expiration.
Step by step

How to get a Massachusetts dealer license

The order that works for a first application. Tick each step off as you finish it.

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  1. Start with the city or town

    The Class 2 license is granted by the licensing authority where the lot will be (the police commissioner in Boston). Ask for its Class 2 application, fee, meeting schedule and the departments that must sign off. What a municipality asks for beyond state law differs from place to place.

    MGL c. 140, §59

  2. Set up the business

    File articles with the Secretary of State if you are forming a corporation or LLC, get a business certificate from the municipality if you use a trade name, and get an EIN. Register the business with the Department of Revenue. The RMV asks for these documents when you apply for plates.

    Business certificate · EIN

  3. Secure a location that passes both tests

    The site has to satisfy local zoning and occupancy rules and the RMV's dealer plate standards: a non-residential permanent building, a 100 square foot office, a display area, customer parking, a sign and 30 public hours a week. Check both before you sign a lease.

    540 CMR 18.02

  4. Get the $25,000 bond and line up repairs

    Buy the $25,000 surety bond (one for each business name and each city or town), or ask the local authority whether it accepts a certificate of deposit or irrevocable letter of credit instead. The authority cannot issue a Class 2 license unless you maintain or have access to a repair facility that can handle warranty repairs.

    MGL c. 140, §58(c)

  5. File the Class 2 application and get the license

    Submit the municipal application with the bond, fee and any local sign-offs, and attend any meeting the municipality requires. A first-time application is made in duplicate so a copy goes to the Registrar of Motor Vehicles. The license lists the premises you may use.

    Fee set locally, up to $200

  6. Apply to the RMV for dealer plates

    Apply online through myRMV or by mail to the Section 5 Division. Include the dealer license, business certificate, proof of your EIN, the lease, photos of the sign, posted hours and office, a floor plan, and a list of authorized plate users with copies of their driver's licenses. There is no application fee.

    RMV Section 5 Division

  7. Pass the State Police visit and pay for plates

    The RMV forwards your file to the State Police Compliance Unit, which inspects the site. If it passes, the RMV mails a Registration Application Card that your insurer must stamp. Return it with the fees ($100 a year for the registration certificate plus $20 per plate) to receive your plates.

    $100 + $20 per plate

  8. Set up records and warranty paperwork

    Keep a Used Vehicle Record Book in a format the RMV approves. Every used vehicle you offer needs the federal Buyers Guide and the state Used Vehicle Warranty Law sticker. State law requires an express written warranty on most used vehicles a dealer sells for $700 or more.

    MGL c. 90, §7N1/4

Practical advice

Read the RMV's dealer plate rules (540 CMR 18.00) before you take a lease, not after the town approves you. A town can license a site that still fails the RMV's test, for example an office in a home or a lot the license does not authorize for display. Ask the local authority to write vehicle display into the license itself.

Before you apply

Seven things to settle before any state application: the business, the owners, the money and the property.

Read the startup playbook
The lot and the office

Massachusetts dealer location requirements

What the state checks at the business address.

  • A permanent building or permanently affixed structure (an office trailer counts) that you own or lease for your exclusive use at the licensed address.
  • No part of the dealership premises may be in a residence, and dealer records may not be kept in one.
  • An office of at least 100 square feet with a desk, chairs and filing cabinets or drawers for the required records.
  • Open to the public at least 30 hours a week on business days, with the hours posted outside where the public will see them.
  • A permanently affixed exterior sign showing the name and nature of the business, subject to local sign rules.
  • A display area that your local license authorizes, with room to walk between vehicles, plus customer parking. It cannot be shared without a physical separation.
  • Your own repair facility, or access to one, sufficient for warranty repairs under 540 CMR 16.00.

Zoning comes first

A site that meets the state’s rules can still fail local zoning. Get written approval for vehicle sales from the city or county, and ask the landlord for a lease that depends on the license being issued, before you sign.
Once you are licensed

Keeping a Massachusetts dealer license

Renewal and ongoing duties

Renew the Class 2 license with your city or town before it expires on January 1, and pay the RMV's yearly registration and plate fees. Keep the bond in force: if it is cancelled you have 10 days to replace it before the license is revoked. Tell the RMV in writing within 30 days of a change of name, address or ownership.

Federal rules that apply here too

  • The FTC Buyers Guide, posted on every used vehicle you offer for sale.
  • The FTC Safeguards Rule: a written plan for protecting customer financial information.
  • IRS Form 8300 when a customer pays more than $10,000 in cash.
  • A federal odometer disclosure on each transfer.
How each federal rule works
FAQ

Massachusetts dealer license FAQ

The questions first-time dealers ask most.

How do I get a used car dealer license in Massachusetts?

Apply to the licensing authority of the city or town where the dealership will be for a Class 2 license. You need a suitable place of business, a $25,000 bond or approved equivalent, and access to a repair facility. Once you hold the local license, apply separately to the Registry of Motor Vehicles for a dealer registration and plates, which involves a State Police site visit.

How much is the dealer bond in Massachusetts?

$25,000 for a Class 2 used car dealer. State law also lets the municipal licensing authority accept a certificate of deposit or an irrevocable letter of credit with the same face value. A separate bond is required for each business name and for each city or town where you have a place of business.

How much does a Massachusetts dealer license cost?

The Class 2 license fee is set by each city or town and cannot exceed $200. Melrose, for example, charges $150 a year. The RMV charges no application fee for dealer plates. Once approved you pay $100 a year for the registration certificate plus $20 for each plate, and your city or town assesses an excise of $100 per dealer plate.

Do I need a pre-licensing course in Massachusetts?

The state licensing statute and the RMV's dealer plate regulation do not list a pre-licensing course or exam. Because the license is issued locally, confirm with your city or town whether it has added a requirement.

Can I get a Massachusetts dealer license without a car lot?

Not for retail sales with dealer plates. The RMV will not issue plates to a retail dealer without a display area that the local license authorizes, customer parking, an exterior sign and 30 public hours a week, and it does not accept premises in a residence. A dealer who sells only to other dealers is exempt from the display, sign and 30 hour rules but still needs an office of at least 100 square feet with posted office hours.

How many cars can I sell in Massachusetts without a dealer license?

The licensing statute does not give a number. It requires a license for anyone in the business of buying or selling used vehicles. The used vehicle warranty law does draw a line: a person who has sold more than three used motor vehicles in the preceding twelve months is treated as a dealer.

Sources

Checked October 2026. This is general information, not legal, tax or insurance advice. Fees, bond amounts and forms change, and local zoning rules vary. Confirm current requirements with your city or town or your attorney before you sign a lease or pay a fee.

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