How to Become a Car Dealer in Texas

A car dealer is someone who sells new and used cars. It can be a challenging and lucrative career, but in the state of Texas there are strict laws, regulations and requirements that must be followed in order to start and enjoy a successful career as a car dealer. By doing your due diligence, working directly with the Texas Department of Motor Vehicles and aligning yourself with other Texas car dealers anyone can become a car dealer in Texas.

Instructions

1. Decide if you want to be a new or used car dealer, or both. There are different requirements and paperwork that must be completed depending on the type of cars you sell.

2. Apply for a General Distinguishing Number (GDN). In the state of Texas, you must have this number whether you sell used or new cars. In order to apply for a GDN, you will need a permanent place of business, signage that meets regulations and enough space to display five cars. A new GDN costs $500, and you must be sure to use the right form, as there is a different form for new and used car dealers.

3. Contact the car manufacturer for the make of car that you want to sell. A new car dealer must have a franchise agreement in place with the manufacturer of the cars that they sell. This is not required of used car dealers.

4. Apply for a license from the Office of Consumer Credit Commissioner (OCCC). This license is required for all new car dealers, and deals with all aspects of motor vehicle financing. Used car dealers do not have to obtain this license.

5. Visit or call the Texas Department of Transportation to ascertain any additional licenses that may be needed. You can either apply while at the Department of Transportation or visit their website to download the forms. Some of the licenses that may be needed include a converter license, intransit license, lease facilitator license, lessor license, manufacturer or distributor license and a representative license. The Texas Administrative Code will also help to determine the licenses needed and is a required read for rules regarding licenses, vehicle advertising, hearings and the Lemon Law.

6. Read the Texas Transportation Code Chapter 503 to become familiar with Texas regulations for used and new car dealer licensing. There are many legal restrictions and requirements for car dealers in the state of Texas. You must know these laws in order to be in compliance and to avoid the risk of losing your business in the future.

7. Attend the dealer training seminar offered by Texas Department of Transportation Motor Vehicle Division. This is a free class that covers laws on advertising, selling and financing vehicles.

8. Join one of the major car dealer associations. They can provide support and information by way of seminars and classes, which is especially useful during the application process. Used car dealers should contact the Texas Independent Automobile Dealers Association and new car dealers should contact the Texas Automobile Dealers Association.

References

• The Unofficial DMV Guide: Dealer Licensing
• Texas Constitution and Statutes: Occupations Code

Resources

• Office of Consumer Credit Commissioner: Motor Vehicle Sales Finance Licensing Forms
• Texas Independent Automobile Dealers Association
• Texas Automobile Dealers Association
• Office of the Secretary of the State: Texas Administrative Code