Your Guide to Car Auction Licenses in Texas

Any business that wishes to sell vehicles at auction in Texas will need to secure a car auction license from the Texas DMV. This license allows you to auction cars on your own premises, or hold auctions at the lots of other licensed dealers. WIthout this type of license, you will be unable to auction vehicles legally, and may face fines and the mandatory closure of your business.

Car auction licenses are required in Texas because they help to regulate the industry and protect the consumer. This means that dealers need to meet a set of minimum requirements to show that they have registered their business and taken out a specialist auction dealer surety bond.

These measures are designed to ensure dealers abide by the rules and regulations governing their industry and to provide financial protection to future customers. If the dealer acts in a fraudulent manner, customers can claim against the dealer’s surety bond for financial reimbursement for any losses incurred.

To help you in your new career as a vehicle auctioneer, we’ve put together a comprehensive car auction license guide. Read on to learn more and streamline your Texas auction licensing application with Lance Surety.

Texas Auto Auction Licenses Explained

Anyone selling five or more cars per year in the State of Texas is required to apply for a dealer license, and depending on the vehicles you sell and how you sell them, the state will issue a number of different license types. These include:

• Motor Vehicle – lets you sell used vehicles only
• Motorcycle – with this license you can sell motorcycles and ATV’s only
• Travel Trailer – allows you to sell travel trailers only
• Utility or Semitrailer – you can sell new and used utility or travel trailers only
• Wholesale Dealer – with this license you can only sell wholesale to other licensed dealers. No retail sales are permitted
• Wholesale Auction – allows you to sell vehicles at auction
• Mobility Motor Vehicle – licenses you to sell vehicles equipped to transport disabled persons only
• Franchise – allows you to sell new cars only

If you want to sell cars at auction, you’ll need to apply to the Texas Department of Motor Vehicles (TXDMV) for a wholesale auction license. This type of license has its own General Distinguishing Number (GDN). Only dealers with wholesale auction GDN licenses may hold a wholesale auction.

If you have a motor vehicle dealer license, you may sell your own inventory at auction on your own lot, however, you must use an auctioneer who is licensed by the Texas Department of Licensing and Regulation.

If you want to sell straight to the public or directly to another dealership, you’ll need to apply for a wholesale dealer license or a used car dealer license. You can find out more about these license types by taking a look at our guides on how to get a wholesale dealer license and how to start a used car dealership.

Documents Required for Dealer License Applications

You’ll need to include a number of documents with your dealer license application. Some of the most important documents required for an independent dealer license in Texas include:

• Proof of ID (such as a driver license)
• Proof of business registration
• Your surety bond
• Your completed application form

Main Requirements for a Car Auction License

You’ll need to meet set requirements in order to apply for your car auction license. These license requirements include:

Register Your Business

You’ll need to legally register your auto dealer business with the Texas Secretary of State before you can start selling cars. It’s at this point you’ll need to decide if you’re going to operate as a sole proprietorship, LLC, partnership or corporation.

Get a Permanent Business Location

You’ll need to rent or buy a permanent business location that meets all DMV requirements. These include having a business sign and a display area for your vehicles.

Get a Surety Bond

Getting a Texas Auto Dealer Bond is one of the most important parts of the licensing process. Car auctioneers need to purchase a Texas car dealer bond to protect future customers in the event the licensee breaks the conditions of their bond, for example, by acting in a fraudulent manner.

The set bond amount for this type of license is $25,000. Because car auction licenses in Texas are valid for two years, the surety bond must also have a two-year term. Find out how to get a surety bond, and learn how your credit score can influence the cost of your bond, by contacting one of our experts today.

You’ll also need to pay a license fee of $700 for your General Distinguishing Number and $90 for each of your dealer license plates. When considering your surety bond, 1-3% of the $25,00 bond amount is fairly common, however, the exact cost of your bond will depend on your credit score.

For more information on how to gain your Car Auction License in Texas, your surety bond, and any other advice you might need to complete the process, contact Lance Surety today to discuss your specific requirements. Alternatively, explore the blog for more insights directly related to your industry here.