How to Get a California Dealer License

Published: Oct 11, 2018
California Auto Dealer License Guide

 

To sell either new or used vehicles in California, or to act as a broker or wholesaler, you will need to get a dealer license. Dealer licenses are issued by the state Department of Motor Vehicles.

To get licensed you need to comply with the specific requirements for the license you want to get. These may include complying with specific location requirements, passing an education course and exam, and obtaining an auto dealer bond.

See below for a step-by-step guide on applying for your California dealer license.

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California Dealer License Types

There are four main types of dealer licenses in California. These are:

  • New – licensees can sell new vehicles to the public or other licensed dealers (can also hold a new/used license)
  • Used – licensees can sell used vehicles to the public or other licensed dealers
  • Wholesale – licensees can sell vehicles only to other licensed dealers
  • Autobroker – licensees can only arrange or assist in the purchase of a vehicle that does not belong to them by a person

The licensing process for these dealers is fairly similar, though there are some conditions that only apply to some of them.

State Business Registration Requirements

Before you can apply for your license at the California DMV you must register your business in the state.

To complete the business registration process, you need to:

  • Obtain an Employer Identification Number (EIN) from the IRS
  • Register your business with the Secretary of State
  • Register with the Board of Equalization and obtain a resale (seller’s) permit
  • Register your business with other state agencies such as the Employment Development Department (EDD)

Once you’ve completed these steps, you can proceed with applying for your license.

California Dealer License Requirements

The application process for any of the four main dealer license types is comprised of completing the application forms packet in full and complying with the additional requirements.

Application forms

There are two separate application forms packets. These are the:

These packets include the majority of forms you will be required to complete as part of your application process. On top of completing these, you will need to provide several other documents and comply with location and photograph requirements. See the next section.

Location requirements

  • All dealer types in California must have a location for their business, and obtain property use verification from your local zoning or planning office
  • All dealers are required to have an office at the premises of their business location
  • All dealers, except wholesale dealers, must have a business sign at their business location
  • New and used dealers specifically must have a lot, or display area, for the cars they will be selling
  • Brokers and wholesale dealers do not require a display lot

Photograph requirements

Compliance with all of the above must be properly photographed and attached to your application forms packet. You can find the full details of what kinds of photographs you need to take at the Occupational Licensing Photograph Requirements page.

Document requirements

In addition, you must also provide the DMV with the following documents:

  • A copy of your lease or rental agreement
  • A copy of your Articles of Incorporation (if applicable)
  • A copy of your Fictitious Name Statement (if applicable)
  • A copy of your city and/or county business license (if applicable)
  • DMV 8016, Request for Live Scan Clearance
  • A copy of your resale (seller’s) permit from the Board of Equalization

On top of the above, California used and wholesale dealer license applicants must also comply with two further requirements. Applicants for both these license types need to pass an education course with a DMV-approved education provider. Once they have passed the course, such applicants also need to pass a test with one of their local inspectors.

Finally, dealers also need to have an inspection conducted at their dealership as part of the application. Contact your local inspector from the link above to learn more about the inspection and schedule one.

License fees

Applications are filed with your local occupational licensing inspector. Along with submitting your application packet, you will need to pay a number of licensing fees. These are as follows:

  • $175 Non-refundable application fee
  • $300 New Motor Vehicle Board fee
  • $100 Autobroker Endorsement fee (only for brokers, in addition to the application fee)
  • $70 Fee per branch office (if applicable)
  • $87 Fee per dealer plate (optional)
  • $1 Family Support Program fee

California Auto Dealer Bond Requirement

Obtaining a surety bond is also an important part of the licensing process for new, used, and wholesale dealers in California. New and used dealers need to obtain a $50,000 bond, whereas wholesale dealers require a $10,000 bond.

This bond is required to guarantee dealers’ compliance with Section 11710 of the California Vehicle Code.

Bond cost

The cost of getting bonded is not the same as the bond amount. The surety that issues the bond examines a dealer’s personal credit score, along with other financial factors, to set a rate at which they can get bonded. Typically, the better your credit score, the lower your rate will be.

You can get a quick and easy estimate of the cost of your bond by using our bond calculator below.

Surety bond cost calculator

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Based on your credit score, your expected yearly premium is: $500 - $1000

A copy of this estimate has also been sent to [email protected]

For a FREE exact quote, take 5 minutes to submit our online application and we'll be in touch with you shortly.

Dealer License Renewal

All dealer licenses in California are renewed annually. You will be notified by the DMV 90 in advance that your license will be expiring. You will then need to complete form OL 45, along with several other forms which are specified in the renewal application itself.

If you have any questions about the California dealer license application process, make sure to contact the DMV for more information.

If you would like to know more about the bond for California auto dealers, contact us at 877.514.5146 anytime!

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Victor Lance is the founder and president of Lance Surety Bond Associates, Inc. He began his career as an officer in the U.S. Marine Corps, serving two combat tours. As president of Lance Surety, he now focuses on educating and assisting small businesses throughout the country with various license and bond requirements. Victor graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan's Ross School of Business.