How to start a used car dealership in Arizona
Last verified: November 9, 2026. Every rule links to its official source.
To start a used car dealership in Arizona you need a Used Motor Vehicle Dealer license from the Arizona Department of Transportation (ADOT). Plan on a non-residential site, a $100,000 surety bond, fingerprints for each 20 percent owner, a transaction privilege tax (TPT) license and $15 filing and $100 license fees. Financing your own customers adds a DIFI license once your outstanding contracts pass $50,000.
Arizona at a glance
| What | The number | Source |
|---|---|---|
| License | Used Motor Vehicle Dealer, from ADOT; $15 filing plus $100 a year | A.R.S. 28-4302 |
| Dealer at | 7 or more used vehicles in a continuous 12-month period | A.R.S. 28-4301 |
| Surety bond | $100,000 for a used dealer; $25,000 for wholesale | ADOT: dealer license types |
| Course | None required today | A.R.S. 28-4361 |
| Sales tax (TPT) | 5.6 percent state; 9.1 percent combined in Phoenix (computed; lower on the price above $14,338) | ADOR rate table, November 1, 2026 |
| Temporary plates | Void 45 days after issue | A.R.S. 28-4551 |
| Used-car warranty | Implied for 15 days or 500 miles, whichever comes first | A.R.S. 44-1267 |
| Financing your own customers | DIFI license once outstanding contracts exceed $50,000 | A.R.S. 44-281 |
Who will you deal with to open an Arizona dealership?
ADOT licenses you, your city or county controls the location, and the Department of Revenue licenses you for TPT, which ADOT requires first. DIFI joins if you finance your own customers.
| Office | What it grants, collects or enforces |
|---|---|
| ADOT Motor Vehicle Division, Dealer Licensing | The dealer license, dealer plates, temporary plates and off-premises permits. It reviews your site photos and may inspect in person (A.R.S. 28-4364). |
| ADOT Office of Inspector General | Unlicensed dealer complaints, and temporary plates past 45 days, which can bring penalties and a suspension of your right to issue them. |
| Arizona Department of Revenue (ADOR) | The TPT license, required at licensing and every renewal, and the TPT on each sale, including the city tax for Phoenix, Tucson, Mesa and Chandler. |
| Arizona Corporation Commission or Secretary of State | Your entity filings, which must match your ADOT application. Individuals and partnerships register a DBA with the Secretary of State. |
| Your city or county | Zoning, and a business license or registration in Tucson, Mesa and Chandler. Phoenix has no general business license. |
| Department of Insurance and Financial Institutions (DIFI) | The sales finance company license, once your outstanding contracts exceed $50,000, and examinations of licensees. |
| Attorney General | Consumer Fraud Act cases, where a court can impose up to $10,000 per willful violation. |
Which license do you need for cash, financed and wholesale sales?
Financing raises the fee or adds a license, and wholesale is a separate class.
- Cash. The Used Motor Vehicle Dealer license covers retail sales to the public.
- Outside lender financing. If you sell on a non-cash basis through a financial institution, you file ADOT’s Contract with a Third Party form, and your license fee becomes $400 the first year and $250 at each renewal. A dealer that assigns its contracts to outside lenders is excluded from DIFI’s license (A.R.S. 44-281). You may not sell or transfer a contract to anyone in Arizona who lacks that license (A.R.S. 44-282).
- Financing your own customers. This is buy here pay here. Once the contracts you create or hold exceed $50,000 outstanding, you need DIFI’s license. For these contracts, A.R.S. 44-291 allows interest up to the rate the contract sets, with no numeric cap. The late charge on an installment not paid in full on the tenth day after its due date may not exceed 5 percent of its unpaid balance. See Financing your own sales in Arizona.
- Wholesale only. A wholesale dealer sells “only to licensed motor vehicle dealers,” needs no established place of business, must be an Arizona legal resident (A.R.S. 28-4335) and posts a $25,000 bond. Selling at retail on it carries a civil penalty of $1,000 to $3,000 per violation.
What are the steps to start a used car dealership in Arizona?
There are 10 steps. The order matters: the TPT license must show the lot’s address, and Tucson and Mesa ask for the TPT license before issuing their own. How to get an Arizona dealer license, step by step covers each one, and the one-page Arizona checklist puts them in order.
- Set up the business. Your entity papers must match your filings with the Arizona Corporation Commission or the Secretary of State, and individuals and partnerships must register any DBA with the Secretary of State. ADOT also asks for a local business contact who lives in Arizona.
- Choose a site that meets ADOT’s rules. It needs room to display 2 or more vehicles and must be devoted principally to the dealership; a used dealer may use a vacant lot but never a residence (A.R.S. 28-4301). The sign must be permanent and legible from 300 feet in daylight, and hours cannot be “by appointment only.”
- Confirm the zoning before you sign a lease. ADOT asks for no zoning letter, so the check is yours. In Phoenix, car sales are permitted in C-3 and need a City Council special permit in C-2.
- Get your TPT license from the Department of Revenue. Apply online with the JT-1 for a same-day license number. It must show the lot’s physical address, and ADOT will not license you without it.
- Get your city business license. Phoenix has none. Tucson charges $25 to apply plus $50 a year, Mesa $25 and Chandler $45.
- Buy the $100,000 surety bond. It goes on Form 38-1301 and covers unpaid title and registration fees and taxes and failure to deliver a valid title. No official source publishes a premium, so get several quotes.
- Get fingerprinted. Each applicant, partner and 20 percent owner is fingerprinted for a state and federal check (A.R.S. 28-4361). Each pays the DPS fingerprint fee, plus any vendor charge.
- Put up the sign, photograph the site and apply online. ADOT accepts no paper applications; the $15 filing fee goes in with your documents and site photos. ADOT says it is “transitioning to a new software platform,” so check its dealer licensing page first.
- Pay the invoice and wait for the license. ADOT invoices the $100 license fee and $30 per dealer plate after it accepts your file and the records check is done. A provisional license, with a $10 filing fee, may let you operate while the check finishes.
- Add a DIFI license before you finance your own sales. Apply to DIFI through NMLS before the contracts you create or hold exceed $50,000 outstanding. The fee is $500, plus $250 per branch (A.R.S. 6-126); confirm any first-year proration with DIFI.
What does it cost to open a used car lot in Arizona?
The state’s fees are small: $15 to file, $100 for the license and $30 per dealer plate. Private companies price the bond premium and fingerprint processing, and cities set their own fees.
| Item | Cost | Who sets it |
|---|---|---|
| Filing fee | $15 | State law |
| License, first year | $100, or $400 with a third-party lender relationship | State law |
| Annual continuation | $100, or $250 with a third-party lender relationship | State law |
| Dealer plates | $30 each | State law |
| Provisional license filing | $10 | State law |
| Fingerprint check | DPS fee plus any vendor charge | DPS and the vendor |
| Bond premium | Quoted by the surety | The surety |
| TPT license, city fee | Phoenix $50; Mesa and Tucson $20 each | ADOR |
| City business license | Phoenix none; Tucson $25 plus $50 a year; Mesa $25; Chandler $45 | The city |
| DIFI license, if you finance | $500 to apply; $500 plus $200 per branch to renew | State law |
No total appears here: no official source prices the bond premium, and rent and inventory depend on your plan.
How long does it take to get an Arizona dealer license?
We found no ADOT processing time, and the private guides that give one disagree. The clocks you can plan around are local and tax steps:
- TPT license. A number the same day online; the certificate arrives by mail in 7 to 10 business days.
- City licenses. Mesa’s takes 10 to 30 calendar days; Chandler’s about 10 business days.
- Phoenix C-2 sites. The special permit needs a City Council decision on the Planning Commission’s recommendation.
- The license. ADOT invoices after it accepts your file and finishes the records check, and a provisional license may let you operate while the check runs.
What do you have to do in your first 90 days as a licensed dealer?
Six duties start with your first sale. Each is covered in After the sale in Arizona, and who can inspect you.
- Title before you sell. You must hold each used vehicle’s title, in your name, before you try to sell it (A.R.S. 44-1267).
- Temporary plates. You must send an electronic record through an authorized provider, with a $1 fee, before issuing one. ADOT allows one per vehicle, only to a buyer whose title and registration applications are filed by then (A.R.S. 28-4547).
- The title deadline. File title and registration at the sale. ADOT’s dealer training has used a 30-day standard, and the temporary plate dies at 45 days. You must also notify ADOT of the transfer within 15 days; the temporary plate record counts.
- Tax. Computed from ADOR’s November 1, 2026 table, the combined rate is 9.1 percent in Phoenix, 8.7 in Tucson, 8.3 in Mesa and 7.8 in Chandler. Returns are due the 20th of the month after each period, monthly, quarterly or yearly by what you owe, and a $0 return is required when you sell nothing.
- Emissions. With a lot in Area A (parts of Maricopa, Pinal and Yavapai counties) or Area B (part of Pima County), you must not deliver a retail vehicle until it passes any required test, at your cost (A.R.S. 49-542).
- Records and inspections. Keep deal jackets, the file for each sale, at the lot at least 3 years, and keep the vehicle log permanently. ADOT agents and the highway patrol may inspect them during business hours (A.R.S. 28-4403).
What trips people up
- Choosing a license before deciding how you will sell. Wholesale cannot sell to the public, and holding your own contracts past $50,000 takes a DIFI license.
- Signing a lease before the zoning check. In Phoenix a C-2 lot needs a City Council special permit.
- Selling a few cars while you wait. The seventh used vehicle in 12 months makes you a dealer, and unlicensed dealing is a class 1 misdemeanor (A.R.S. 28-4502). See How many cars can you sell in Arizona without a dealer license?
- Writing “as is” and stopping there. Arizona’s “as is” disclosure says only that no express warranty applies (A.R.S. 28-4412). The 15-day or 500-mile implied warranty still applies, and the contract needs its bold warranty statement.
- Letting a temporary plate run past 45 days. ADOT’s Inspector General can penalize each one and suspend your right to issue them.
What changed recently
- As of November 2026. ADOT says it is “transitioning to a new software platform,” and new applicants use an ADOT Force account.
- January 9, 2026. Maricopa County’s updated zoning ordinance took effect for unincorporated areas.
- June 25, 2025. Laws 2025, chapter 222 moved DIFI sales finance renewals to December 31 each year. The next deadline is December 31, 2026.
- February 19, 2025. SB 1433, which would have required a 6-hour dealer course, had its last action in a Senate committee and did not become law.
Frequently asked questions
Do you need a license to sell used cars in Arizona?
Yes, once you buy, sell, auction, exchange or negotiate 7 or more used vehicles in a continuous 12-month period. Arizona law then treats you as a used motor vehicle dealer. Dealing without a license is a class 1 misdemeanor, with a civil penalty of $1,000 to $3,000 per violation plus the TPT owed.
How much does it cost to start a used car dealership in Arizona?
The state charges $15 to file, $100 for the license ($400 with a third-party lender) and $30 per dealer plate. Private companies price the premium on the $100,000 bond and the fingerprint processing, cities set their own license fees, and rent and inventory depend on your plan.
Can you run a car dealership from home in Arizona?
Not a retail one. A used dealer’s place of business may be a vacant lot, but never a residence, tent or temporary stand. A wholesale dealer, which sells only to licensed dealers, needs no established place of business, and ADOT asks for a lease or deed only if its office is not in the home.
Do you need a separate license for buy here pay here in Arizona?
Yes, once the retail installment contracts you create or hold exceed $50,000 outstanding. You then need a sales finance company license from DIFI, applied for through NMLS. The statutory fees are $500 to apply and $500 plus $200 per branch to renew, due by December 31 each year. Ask DIFI about any first-year proration.
What is the sales tax on a used car in Arizona?
Arizona taxes a dealer’s retail sales through its transaction privilege tax: 5.6 percent state, plus county and city rates. Computed from ADOR’s table effective November 1, 2026, the combined rate is 9.1 percent in Phoenix, 8.7 in Tucson, 8.3 in Mesa and 7.8 in Chandler. Phoenix taxes the part of a single item’s price above $14,338 at a 2.0 percent city rate instead of 2.8. The dealer reports and pays it.
Do Arizona dealers have to give a warranty on used cars?
Yes, an implied one. A used car dealer may not disclaim the implied warranty of merchantability for 15 days or 500 miles after delivery, whichever comes first. The buyer pays half the cost of the first two repairs, up to $25 each, and the contract must carry the statute’s bold warranty statement.
Your next step
Get the one-page Arizona new dealer checklist: every form, fee and office on this page, in the order you will need them, sent to your email.
When your application is filed, you can set up your lot in LeftLane while ADOT reviews it. LeftLane is a dealer management system for independent and buy-here-pay-here dealers, it runs in any browser, and real people answer the phone at 512-222-9549.
Sources
- ADOT: dealer license types, application process and Dealer Services and Licensing
- ADOT: plate fee FAQ, Form 38-1301 and Dealer Orientation (2019)
- ADOT: Temporary Registration Plates and Office of Inspector General: unlicensed dealers
- Arizona Revised Statutes 28-4301, 28-4302, 28-4335, 28-4361, 28-4364, 28-4403, 28-4406, 28-4412, 28-4501, 28-4502, 28-4533, 28-4547, 28-4549, 28-4551 and 28-4555
- Arizona Revised Statutes 44-281, 44-282, 44-291, 44-1267, 44-1531, 6-126 and 49-542
- Laws 2025, chapter 222 and SB 1433 (2025)
- DIFI: Sales Finance Companies
- ADOR: applying for a TPT license, license fees, filing frequency and rate table, November 1, 2026
- Phoenix Zoning Ordinance 624 and 647; Phoenix License Services
- ADOT: Form 46-0408B
- Tucson: business license; Mesa: General Business License; Chandler: business registration and FAQs; Maricopa County: Zoning Ordinance
This guide is general information for dealers, not legal advice. Rules and fees change. Confirm with the agency or a licensed attorney in your state before you act.