How to Obtain an Auto Dealer License

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Obtaining a license to sell vehicles can be harder in some states than in others. For example, California makes it much harder for people to obtain a dealership license than Texas. Your state department of motor vehicles will give you most of the information regarding what they require in order for you to pass inspection in your sales lot. You cannot get a license until you pass this inspection. Here are the necessary steps you'll need to take in order to get an auto dealer license.

  • Contact your local department of motor vehicles. They will give you information on the requirements according to the state you live in. California, for instance, will require a 6-hour pre-licensing class before becoming a dealer. These requirements will follow up with a test.

  • Fill out the dealer license application which will specify what type of vehicles you will sell. There is $10 fee per category and a $45 fee overall. You can also apply for the Privilege License for $210, which will give you authority to sell all types of vehicles, but this will mostly depend on the city you will have the dealership in.

  • Find a location to sell vehicles. You will want to make sure it is zoned for either commercial or retail use. Be sure that your lot is an enclosed, permanent structure that is open to the public and that customers can easily go in and out of. Then you will need to have the location approved by the DMV inspector.

  • Pay for the license to sell vehicles. This could cost about $250. Renewal of your license can cost $100. You will need to renew it each year.

  • Get bonded and insured. This could become costly, but it is necessary in order to make sure that you are completely covered if anyone is injured or any damage is done to the vehicles you are selling. Many times you can get discounts if you include all insured and bonding items under one company.

Tips & Warnings

  • Expect the bond and insurance to be expensive. It can go as high as the rent for the lot or area you are selling cars in.
  • Each state requires a license if you're going to sell more than 5 cars per year. Without the license, you can be charged with a misdemeanor crime.

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