How many cars can you sell in a year without a dealers license

Can You Sell A Car Without A Dealers License?

Individuals, partnerships, or companies who carry on the business of trading in motor cars are required by law to have a motor car dealer license. Although you may legally sell a car without a dealer license in some cases, the law limits the number of vehicles you can legally sell in a year without the license.

This blog post provides valuable information for individuals, partnerships, or companies thinking of selling cars either as a business venture, selling occasionally, or privately. It covers what the law says about motor car dealerships and licensing in Australia and the importance of operating as a legal motor vehicle dealer.

Understanding The Terms

Motor car/vehicle, dealer license, and legal dealer are used differently in the context of car dealerships, and it is crucial that you understand this. This section will address the questions below:

• What does the law consider a motor car/vehicle?

• What is a motor car dealer license?

• Who is a legal motor car dealer?

What Does The Law Consider A Motor Car/Vehicle?

While this term can have a broad meaning, legally speaking, it is defined differently in the context of a car dealership. A motor vehicle is a locomotive propelled by a motor and intended to be used on the road.

Based on this definition, a motor car/vehicle includes:

• Wheeled cars/vehicles propelled by a motor on the roads

• Caravan and campervans

The following are not considered motor cars, and you do not require a dealer license to trade in them:

• Trailer

• Motorised scooter, golf buggy, or wheelchair

• Tractor or farm machinery

What Is A Motor Car Dealer License?

A motor car dealer license is a legal document issued to individuals, partners, or companies seeking to sell, buy, or trade-in cars. Without a dealer license, the operations of a car dealer are rendered illegal.

Who Is A Legal Motor Car Dealer?

A legal car dealer is an individual, partnership, or company that is registered and licensed to operate a car dealership business after meeting all the requirements for selling cars as well as conducting purchases and trade-ins.

In other words, you must hold a dealer license to be considered a legal car dealer, except if you are operating under the circumstances highlighted elsewhere in this blog post.

What The Law Says About Car Dealerships

Strict rules regulate car dealerships in Australia. These rules are particular on what the dealers can or cannot do.

For example, the law is clear on:

• Who can sell a car legally without a dealer license

• How many cars you can sell legally without a dealer license

• Who must have a car dealer license

Selling Cars Legally Without A Dealer License

Unlicensed motor dealing is considered a criminal act in Australia. So, you are legally required to hold a current license to work as a motor dealer in Australia. There are, however, exemptions when you can sell a vehicle legally without a dealer license.

The following individuals or transactions do not require a dealer license:

• People registered as salespersons and working for licensed motor car dealers can sell motor cars without a dealer license.

• Persons working in customer service roles for licensed dealerships do not require a motor car dealer license to sell cars.

• Individuals selling privately.

• Suppose you are trading in locomotives not considered as motor cars/vehicles by law. For example, tractors, engines, or vehicle components used in agriculture or vehicles not intended for use on roads.

• Selling to a motor car dealer does not require a dealer license.

• Selling repossessed cars by credit providers or auctioneers.

Number Of Cars Sold Without A Dealer License

So, how many cars can you sell legally without a dealer license?

Even though the law may allow some transactions involving the buying and selling of cars to proceed without a dealer license, it limits the number of cars you can sell in one year without the license.

This number is generally set at four but can even be less under certain circumstances. Unless you can convince the authorities that you never traded for business, you will be required to have a dealer license if you sell or buy more than four cars in any 12-month period.

Who Must Have A Car Dealer License?

While the law may exempt some individuals from having a motor car dealer license, it stresses that the following people must have the license:

• Individuals in charge of auto dealer trading premises

• A motor dealer company director must have a dealer license

• Independent car sellers

• Contractors selling on behalf of manufacturers and their subsidiaries

Motor Car Dealer License Application

If you are interested in legally owning and operating a motor car dealership, you require a dealer license. There is a set of steps that you must go through to be able to lodge a successful application.

The steps include:

• Determining your eligibility

• Knowing the licensing agency in your state

• Understanding the required documents and application fees

• Preparing your documents

• Submitting your application

Who Is Eligible For A Car Dealer License?

You must meet the following motor car dealer licensing requirements for you to qualify for a license:

• Be 18 years old and above.

• You must undertake and pass training in approved courses offered by recognised institutions. This is, however, not a requirement if, in the past two years, you have been a holder of an equivalent certificate. Training providers are state-specific, and it is recommended that you find the one recognised in your state.

• You must have no criminal history. This is established by running a criminal history check once you lodge an application.

• Be an Australian citizen or permanent resident in possession of certified copies of identification documents which may include: birth certificate or extract, driver’s license, passport, citizenship certificate, or work visa.

• You must have sufficient financial resources to carry on the business.

• Know and understand the Act regulating motor car trade in Australia.

• You must have premises from which you can operate as a legal motor car dealer.

Who Is Not Eligible For A Car Dealer License?

• Individuals under the age of 18

• Non-Australian citizens or those not allowed to work in Australia

• An individual convicted of a severe offence in the past five years

• If you are currently disqualified from holding a license

• Persons with criminal history or a pending criminal court case are not eligible for a dealer license

• If you have been disqualified from being a company director, you do not qualify for a dealer license

Who Issues The Dealer License?

Motor car dealer licensing and registration agencies/departments vary across the states. To get a dealer license, you must apply to the relevant government agency or department. Therefore, it is essential that you find out who is mandated to issue a motor car dealer license in your area before lodging an application.

Dealer License Application Fee

You will need to make some payment when you lodge your application. The payment is for:

• The license fee that varies from state to state

• A criminal history check fee

Dealer License Processing Time

The dealer license processing time ranges from four-six weeks but can take longer if there are unresolved issues. In most cases, incomplete applications due to missing information or unpaid fees may cause processing delays.

Successful Application, Rejection, And Withdrawal

If you are found to be fit and proper to hold a license, you will be issued with the following:

• A motor trader’s certificate

• A unique business number

• An information pack explaining your obligation

If, after a thorough scrutiny of your application, it is found that you do not meet any or multiple licensing requirements, your application can be rejected. In the event that the agency or department in charge refuses your application, you are entitled to a partial refund.

This refund is also given if you voluntarily choose to withdraw your application and may include the fee for your criminal history check if it had not been commenced at the time of withdrawal.

While determining if you, your partnership, or your company is fit and proper to hold a dealer license, the licensing and registration authorities will also ask you for information about your associates. In other words, the credibility of the people who will have influence over your business matters and is evaluated to determine your suitability to hold a license.

There are conditions imposed on you when you have been issued with the license. Familiarise yourself with these conditions and other obligations found in the information pack given to you alongside the license.

For example, it is essential to note that once the license is issued, it remains current unless you surrender it or it is canceled and not transferable.

Risks Of Operating As Unlicensed Dealer

There are many risks to operating as an unlicensed motor car dealer, and you should always resist any urge to do so. Some of the most common risks include:

• Operating as a motor dealer without a license is a severe offence that can land you in trouble with the law, including serving a jail term and/or heavy penalty.

• You risk being disqualified from holding a dealer license or registration certificate if you operate without a dealer license.

• Your business can be shut down, making you lose your investment.

• Damaging your reputation as a dealer. This may impact your future business ventures.

• If your business is robbed or an accident happens at your premises, it becomes difficult to get help from the authorities if you are operating illegally.

Understand The Law Before Trading Cars

It is essential to know the law before you start carrying on the business of trading motor cars in Australia. Generally, car dealers in Australia must be licensed. Under certain circumstances, however, you can legally sell cars without holding a dealer license.

For example, you can only sell four or fewer cars without a dealer license within a 12-month period. If you deal in four or more while unlicensed, your business could be closed, and you can serve a jail term besides paying heavy fines.