Selling used cars in Ohio can be a very strong business — especially as more buyers look for affordable vehicles instead of brand-new models. But starting a used car dealership is not like launching a simple retail shop. Ohio has specific licensing, bond, location, and insurance requirements you must meet before you can sell your first car.
This guide walks you through how to start a used car dealership in Ohio, what the state expects, and how insurance and surety bonds fit into the process.
⚠️ Note: This guide is for general informational purposes only and is not legal advice. Always confirm requirements with the Ohio BMV, Attorney General, and your own advisors before applying.
Step 1 – Plan Your Used Car Dealership
Before you apply for a license, you’ll want to answer some basic business questions:
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What kind of inventory will you focus on?
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Low-cost cash cars?
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Late-model financing deals?
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Trucks and SUVs?
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Will you offer in-house financing or work with outside lenders only?
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Where will your dealership be located and how many vehicles can you realistically display?
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How much starting capital do you have for:
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Lot rent or mortgage
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Initial inventory
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Licensing fees, bond, and insurance
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Basic office and dealership equipment
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You’ll also want to choose a business name, decide on your business structure (LLC, corporation, etc.), and make sure the name is available with the Ohio Secretary of State.
Going “digital-first” is also important. Most buyers start online, so plan for:
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A simple website
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Branded Google Business Profile
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Basic online listings for your inventory
Step 2 – Understand Ohio Used Car Dealer Requirements
Ohio has specific rules for used motor vehicle dealers. At a high level, you will typically need to:
Complete an Ohio used motor vehicle dealer training course
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Secure an established place of business that meets lot and office requirements
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Have a permanent business sign visible from the roadway
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Maintain set business hours posted and open to the public
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Meet the required net worth threshold to qualify for a license
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Pass a background check
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Obtain a $25,000 used motor vehicle dealer surety bond
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Submit the dealer license application and pay required fees
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Pass an inspection by the BMV Dealer Licensing division
The $25,000 motor vehicle dealer bond must be posted in your business name and filed with the appropriate state office before a used motor vehicle dealer’s license will be issued.
Your best move is to review the latest requirements on:
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Ohio BMV Dealer Licensing
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Ohio Attorney General (for the bond)
…and then build your startup checklist from there.
Step 3 – Secure Your Business Location & Setup
Before you’re licensed, you’ll need a physical location that meets the state’s dealership standards. In Ohio, this generally includes:
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A separate office or enclosed structure
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A clearly defined display area for your vehicles
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Proper separation from residential or unrelated businesses
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A permanent sign with your dealership name in large letters
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Easy access from the nearest roadway
At the same time, think about how the lot will function day-to-day:
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Where will customers park?
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Where will contracts and titles be completed?
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Where will you safely store keys, titles, and cash?
Getting your physical location right from the start makes the licensing and inspection process much smoother.
Step 4 – Obtain Your $25,000 Dealer Bond
To get a used motor vehicle dealer license in Ohio, you must obtain a $25,000 dealer surety bond (also called a motor vehicle title defect bond).
This bond:
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Is posted in favor of the State of Ohio
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Helps protect consumers if title or legal issues occur
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Must be kept in force for the duration of your license
You do not pay $25,000 out of pocket — you pay a bond premium (usually a small percentage of the bond amount) based on credit and other factors.
If you’re not sure where to start with bonding, that’s something we can walk through with you alongside your insurance setup.
Step 5 – Get the Right Dealership Insurance in Place
Ohio requires dealers to carry certain types of coverage to operate safely and compliantly. Even beyond legal requirements, the right insurance protects your inventory, your lot, and your reputation.
Common coverages for used car dealers include:
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Garage Liability Insurance
Covers injuries or property damage related to your dealership operations — including test drives, slip-and-fall incidents, and accidents involving dealer plates. -
Garagekeepers Legal Liability
Protects customer vehicles in your care, custody, or control — such as cars left for consignment, detailing, or minor repairs. -
Dealer Open Lot (Inventory) Coverage
Covers your for-sale vehicles against fire, theft, vandalism, hail, and certain other causes of loss. -
Dealer Plate / Business Auto Coverage
Provides liability protection while driving vehicles with dealer plates or any titled vehicles owned by your business. -
Business Property & Business Income
Covers your office furniture, signage, and certain equipment, and can also replace income if your lot must close after a covered claim. -
Workers’ Compensation
Required if you have employees. In Ohio, this runs through the Bureau of Workers’ Compensation (BWC). -
Optional Coverages
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Errors & Omissions (E&O) for paperwork or title issues
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Cyber coverage for stored customer data and electronic payments
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Umbrella liability for additional protection above your base policies
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At Catanzaro Insurance, we specialize in auto dealership insurance and know what lenders, floor plan companies, and the BMV want to see on your policy. We can help you build a package that fits your size, risk level, and budget.
👉 Next step: After reading this guide, be sure to review our dedicated
Auto Dealership Insurance page.
Step 6 – Build Your Inventory & Floor Plan Strategy
Once your location, bond, and insurance are lined up, you’ll need vehicles to sell.
Common ways dealers source inventory include:
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Auctions (physical and online)
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Trade-ins
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Wholesalers
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Direct purchases from individuals
Many dealers also use floor plan financing — a revolving line of credit used to acquire inventory where vehicles themselves are the collateral. Lenders often look at:
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Your dealer license status
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Time in business
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Financial strength and net worth
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Your insurance coverage limits
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How well you manage titles and paperwork
While we’re not a lender, we routinely work with dealers who are applying for floor plans or updating their insurance to match lender requirements. Having the right insurance in place can make these conversations smoother.
Want a deeper breakdown of how floor plan financing works?
Read our Dealer Floor Plan Financing Guide for Used Car Dealers to learn lender requirements, approval steps, and what insurance you need before applying.
Step 7 – Market Your Dealership & Stay Compliant
Once you’re licensed and stocked with inventory, it’s time to get customers on the lot.
Strong basics include:
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A clean, accurate Google Business Profile
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A simple but professional website with your inventory and contact info
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Reviews from real customers
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Consistent signage and branding
Compliance is just as important as marketing. Make sure you:
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Keep accurate records for titles and sales
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Renew your license, bond, and insurance on time
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Maintain your net worth and business hours as required
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Stay current on Ohio dealer rules and updates
Need Help With Insurance or a Dealer Bond?
Starting a used car dealership in Ohio can be extremely rewarding — but the startup checklist can feel overwhelming.
If you need help with:
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Building an auto dealer insurance package
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Meeting lender or floor plan insurance requirements
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Understanding what coverage levels make sense for your operation
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Coordinating surety bond needs alongside your insurance
We’re here to help.
📞 Call 614-489-8383, press option 1
📧 Email info@catanzaroinsurance.com
Or request a quote through our
Auto Dealership Insurance Quote Request Form
and mention you’re starting a new dealership in Ohio.
We’ll walk you through everything step-by-step so you can focus on opening your lot with confidence.
🔗 Dealer Floor Plan Financing Guide — Learn how floor plans work and what lenders require before you buy your first inventory.