What are the advantages and disadvantages for an individual to apply
for a used car dealership license in the state of New Jersey (as
opposed to simply purchasing and reselling cars without a dealer's
license).  Please bear in mind this individual has only a modest
amount of money and does not intend to buy and sell more than 1-5 cars
per month.

Check with the DMV, anyone who sells a certain number of cars in a
year is required to have a dealer's license - and you number would put
you there.  Hmmmmmm, by getting a license you would probably avoid
being charged with being an unlicensed dealer.

Yes, the answer to a similar question about another state reported
that selling more than three cars per year (!) required a license.