If you want to sell motor vehicles in California, you must get an auto dealer license. The California Department of Motor Vehicles (DMV) Occupational Licensing (OL) Branch is responsible for overseeing the licensing process for auto dealers.
In this guide, we will give you a step-by-step process to get your dealers license in California.
Step 1: Determine license type
The first step to getting your dealership license in California is to determine what type of license you need. The State of California offers several different license classifications, each defining what the auto dealer is permitted to do.
- New Dealer License: This license lets the auto dealer sell new and used motor vehicles to the public or other dealers.
- Used Dealer License: This license lets auto dealers sell used motor vehicles to the public or other dealers.
- Wholesale Dealer Only License: This license lets auto dealers sell new and used motor vehicles to other licensed dealers only.
- Autobroker License: This license lets auto dealers assist others exchange motor vehicles for compensation.
Step 2: Get your business location
Auto dealers are required to have a permanent place of business prior to applying for their dealership license.
Your business location will need to meet DMV requirements:
- Comply with all local zoning ordinances
- Have a sign at least two square feet in size with the name of the business
- Have a display area with enough space to show one vehicle
- Have an office with a desk and area for holding business records
After you have a business location that meets the requirements, you will need to take photographs of the place of business. These photos will be part of the application packet you send to the DMV.
Step 3: Complete the pre-licensing course
Certain dealers need to complete a dealer training program before receiving a license. If you want a used dealer or wholesale dealer only license, you are required to complete six hours of pre-licensing education course. You can find a list of approved dealer education providers on the DMV website.
Once you complete the course, you will have to pass a knowledge test. The exam consists of 40 questions. You need to answer 28 questions correctly to pass. You can schedule and take the exam at your local DMV Occupational Licensing Office.
Step 4: Register your business
There are several business licenses and permits required for your auto dealership. This includes a Resale permit and a Seller’s permit from the California Board of Equalization. These permits ensure that you collect and pay sales tax.
You also need to get a business license from your city and possibly county.
Step 5: Get a surety bond
Auto dealers must post a California surety bond. The bond provides financial protection to consumers and the state and ensures that the licensed auto dealer complies with all regulations.
The required bond amount for California motor vehicle dealer bonds depends on the license type. New and used car dealers must post a $50,000 bond while wholesale only dealers must post a $10,000 bond.
California auto dealers only need to pay a small percentage of the required bond amount as a premium. This is typically 1% to 3% of the bond amount. The surety company issuing the bond will determine your premium based on your industry experience, credit history, financial standing, and other factors.
Step 6: Submit dealer license application
Once you’ve met all the requirements, you are ready to submit your license application. You can find all the application forms here on the DMV website.
In addition to the application form, you will need to gather the pictures of your business location, surety bond form, and copies of your business permits. You can then mail your application packet with the appropriate licensing fees (listed below) to the local Occupational Licensing Inspection office.
California auto dealers must pay the following fees to receive their license:
- $175 application fee
- $70 per branch location
- $90 fee for each dealer plate
- $300 motor vehicle board fee
California dealers license frequently asked questions
How do you renew a California dealership license?
California dealer licenses are valid for one year from the date of issuance. The DMV will mail you a renewal notice 90 days prior to the expiration date. You’ll then need to complete the renewal application and send it to the California DMV.
Dealers are also required to complete continuing education requirements every two years.
How much does a dealer license cost in California?
California auto dealers must pay a $175 application fee. Depending on the license type, dealers may have to pay additional fees including a motor vehicle board fee, dealer plate fees, branch location fees.
Dealers are also required to purchase a surety bond. How much this costs varies on an individual basis.
How EZ Surety Bonds can help with a California dealers license
When you’re ready to get your California auto dealer license, EZ Surety can offer you a free online quote for your California auto dealer bond.
We provide competitive premiums and quick turnarounds for individuals of all financial standings. Get in touch today to learn more.