Your Own Dealer License 

"Do you really want to be left alone?"

  • Business Set-Up

  • Occupational Licensing

  • Physical Location

  • Auction Access

  • Dealer Plate 

  • Dealer Bond

  • Temp Plates

  • Consumer Finance

  • Vehicle Registration/Title

  • Inventory Finance/Flooring

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Getting your Dealer License

Thousands of people just like you have considered getting a dealer license in California to access auctions and wholesale deals that would otherwise be closed to them. But finding out exactly how to get a car dealer’s license in California can be a challenge. If you plan to sell cars and make money, you’ll need a dealer license. The law is pretty clear on this “…only the Registered Owner shall sell or offer for sale a vehicle of a type required to be registered” Here is your step-by-step guide to help you get your dealer’s license in California.

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1. Take The (California DMV Approved) Required Dealer Pre-License Training Class 

California requires anyone wanting a Wholesale or Retail Dealer License to take a “Pre-Licensing Class”. No industry experience or additional preparation is needed. By completing the one-day (6 hours) training first, you can save a lot of wasted time and expense.
Most DMV Approved class is 100% online and led by an experienced Instructor and a Licensed Dealer. You can attend using your smartphone, tablet, or computer. A camera or microphone is not required.
Typically after registering, you will receive your clickable link to join the class, a detailed course Dealer Study Guide. You will have a Chat where you can ask the Instructor any questions. After the class, you will receive a recording of the entire class you attended. Your DMV Certificate of Completion will be sent to you.  Two DMV-approved training options are available from most providers.

  • Online with an Instructor – attend a 6-hour “live” class 

  • Online Home Study – complete the training on your schedule, at any time of day

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2. Pass the DMV’s Dealer Test

The California DMV requires that you pass an in-person test at the DMV office.

  • If applying as a Corporation or LLC, one member must pass the test

  • If applying as an Individual, that one person must pass the test

  • If applying as a Partnership (without a Corporation or LLC), all partners must pass the test.

Schedule Your Test at the DMV Occupational Licensing office

Once you have your DMV Certificate of Completion from us, you can call your nearest DMV Occupational Licensing office to schedule your test. The DMV requires the Certificate as proof that you have completed your training and understand the DMV regulations and requirements.

Practice For Your Test

We have an excellent (free) online Practice Test to ensure you’re ready to visit the DMV. You can repeat our Practice Test as many times as you like, at no cost. 

Take the Test at The DMV Occupational Licensing office

Make an appointment at your nearest California DMV Occupational Licensing Office. To pass, you will need a score of 70% or higher (28 correct answers from 40 multiple-choice questions). You are allowed three attempts to pass.

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3. Decide on a Dealer License Type

California has two types of Dealer licenses for selling pre-owned vehicles; Retail and Wholesale.

  • Retail Dealers can access dealer-only auctions, sell to other Dealers -and- sell vehicles to the public. Retail Dealers are required to have an approved commercial office.

  • Wholesale Dealers can also access dealer-only auctions and sell to other Dealers but not to the public. Wholesale Dealers may work from a home office. Some Wholesale Dealers work in partnership with a Retail Dealer to sell through to consumers.

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4. Decide – Corporation, LLC, Partnership, or Sole Proprietor?

  • You can apply for your Dealer License as a Corporation, LLC, Partnership, or as a Sole Proprietorship (a private individual). If you decide to set up your Dealership as a Corporation or LLC, you need to supply the DMV with documents showing Officers that will be active in the operation of your Dealership.
    You can learn more about establishing your own Corporation or LLC here:

Name Your Business

You will need a business name for your license, bank account, and various permits. If you plan to operate your Dealership using a name other than actual Corporation, LLC, or personal name, you must file a Fictitious Name Statement (also known as a DBA) at your local County Recorder’s office.

  • Find where to file your Fictitious Name Statement in your area

5. Get a Business License

If required in your area, you must obtain a Business License at your local city or town office’s Tax or License division. In your area, this license may be called a Business License, Certificate of Occupancy License, or Tax Certificate.

 

6. Get a Seller’s Permit from the CDTFA

Both Retail and Wholesale California Auto Dealers must have a Sellers Permit from CDTFA. To obtain a Sellers Permit, you can walk in your local CDTFA office (California Department of Tax & Fee Administration) to obtain a Sellers permit, which allows you to collect taxes. You can learn more and apply online here.

 

7. Open a Bank Account

Retail and Wholesale Dealers must open and maintain a bank account in the name of the dealership. You must give the DMV permission to confirm your bank account by signing the DMV’s “Authorization to Release Financial Information” form in the Application Package.

 

8. Secure a Location

Retail and Wholesale licenses both require a physical place of business that houses your accounting and business records. A Wholesale Dealer’s office may be located in a residence or commercial location. The office must be accessible from the street, on the ground floor. For example, walking through the kitchen to reach the office would be unacceptable. Retail Dealers are required to have an office dedicated to your dealer business, a two-foot square sign with your name and address posted permanently outside, and a display area. The display area must be large enough for at least one vehicle and reserved as a “Display Area Only”. A representative from the California DMV may inspect a potential Wholesale location. They will definitely visit a Retail location prior to conducting an inspection.

 

9. Get a Dealer Bond

Each Dealer applicant must provide a valid Dealer Surety Bond that protects consumers and the State of California from Dealers should fail to pay their DMV fees or remit sales taxes they collected. Retail Dealers must obtain a $50,000 bond. Wholesale, motorcycle and ATV Dealers require a $10,000 Bond. The cost of the bond typically ranges based on your personal credit score. You can obtain a no-obligation Bond Quote here

 

10. Get a Live Scan

“Live Scan” is a fingerprinting service where your fingerprints are sent to the Department of Justice for a criminal background check. The DMV requires this scan to uncover past criminal activities that may preclude you from obtaining a license. If you’re unsure if your background check will pass DMV standards, you can submit an Abbreviated Application for DMV review.

 

11. Take the DMV Test

The California DMV requires that one member of the dealership passes a 40 question test at the DMV office with a score of 70% or higher (28 correct answers from 40 multiple-choice questions). You are allowed 3 attempts to pass. We have an excellent (and free) practice test for our Members to ensure they’re ready to visit the DMV. 

 

12. Prepare & Submit Your Application

For either type, you’ll need to complete a “Used Dealer Application”, included in a handy forms package provided by the DMV. The DMV put together a great Checklist that details everything you need to include with your application. We recommend that you drop off your completed application in person at your nearest DMV Occupational Licensing Office. You’ll meet your local DMV Inspector(s) there and can set up an appointment for your location inspection.

13. Host the DMV inspection

After reviewing your application, your Inspector will contact you to coordinate a meeting with you to inspect the premises. The Inspection usually takes only a few minutes. When the Inspector approves your location, they will hand you a Temporary Dealer License. https://dealer101.com/how-to-get-a-car-dealers-license-in-california/

 

Summary

As you can see, it’s not difficult to get a car Dealers License in California. It’s a process that we have helped many people navigate to obtain their licenses and start their own business. Ready to get started?