How to Get a Car Auction License in California

Published: Oct 02, 2023
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In California, more than $73 billion is generated in sales by car dealerships. Obtaining a car auction license is one way to share in this revenue without the typical startup costs associated with opening a car dealership. There is a lot to know to begin and turn it into a profitable venture.

What Is a California Auto Auction License?

You need a California dealer license to auction cars in the state. A used car dealer license can usually let you start buying and selling vehicles at auctions, but wholesale-only dealers can only sell to other registered dealers and not members of the public. However, you might need a new dealer license to retail both new and used vehicles. This car auction license guide will cover what you need to know about getting started, whether you're just getting started or looking to expand the business you already have in other states. In all cases, a surety bond is a likely necessity.

Requirements for Obtaining a Car Auction License in California

Finish a Training Course

As part of the dealer application process, you have to go through a training course that the DMV approves before you can sell cars. The content usually takes four to six hours, and multiple training schools offer both in-person and online content. Go through scheduled sessions or take courses at your own leisure.

Get a Passing Score on the Occupational Licensing Exam

If you want your dealer license, you'll have to take a sit-down test at a DMV location. You can expect 40 multiple-choice questions covering dealership matters and selling new and used vehicles. The dealer training course should cover all the information you need for your business license, with content ranging from dealer bonds to sales tax. The minimum passing score is 70%, but you get three attempts to succeed with a waiting period of one week between each sitting.

Step-by-Step Licensing Process

Your license application process with the state of California will start strong once you finish the course and exam. Still, before you can hoist your dealer plate into a display area at your car dealership, you must complete every step of the process.

Step 1: Getting Permits and Licenses

It would be nice if a car dealer license were all you needed to start your place of business, but the California DMV needs more than that. You'll also have to work with the California Department of Tax in getting your vehicle dealer license. At a minimum, plan on obtaining your resale permit, fictitious name statement, business license, and board of equalization resale permit.

Step 2: Prepare Your Location and Take Pictures

If you're a wholesale-only dealer, you won't need your business location for in-person work. You can attend car auctions and do what you need through the DMV website after paying your license fee. However, everyone else needs a physical location that meets specific requirements. They include aligning with local zoning laws, having proper signage displayed, designating a place for records, and a distinct business entrance if you work out of a house. Include photos with your application to satisfy the DMV requirements.

Step 3: Obtain a Dealer Bond

The application process requires you to get your auto dealer bond. To be granted a wholesale dealer license or certificate of completion, you need to convince the government that you will operate ethically as a dealer and uphold the standards of the profession. A credit score is part of the background check, but low credit scores don't automatically disqualify you from getting your surety bond.

Step 4: Fill Out Application Forms

Whether you're looking for a retail dealer license, seller's permit, or an auction license, you must find the proper application packets through the DMV website. Fill them out online or print them on paper to finish with ink before submitting them with the proper application fee.

Step 5: Add Extra Forms

You might have to include various supporting documentation as part of the automotive fee administration and motor vehicle dealer licensing requirements. These could include a live scan fingerprint card, a copy of your occupational license, and copies of all your business licenses.

Step 6: Arrange for the DMV Inspector

Unless you're a wholesale-only dealer, then a DMV inspector has to come out and look over your physical location for doing business. Expect them to verify everything from the proper bond amount to looking over motorcycle plates for the correct display. Before you can exercise your auto dealer license and resale permit, you need them to sign off that everything is correct.

How Much Does a California Car Auction License Cost?

A dealer surety bond will carry an annual premium, but you can find out how much it will cost with a good bond quote. Underwriters that are willing to provide you a California auto dealer bond will do so based on your creditworthiness and how likely it is that you'll get a claim. Your premium rate might be as low as 1% to 3% if you have robust financial strength, industry experience, and an excellent individual credit score. On the other hand, if you just went through the dealer education program and licensing process, your newness to the industry might push your premium rate to 10% or even higher. Specific fees you might face include the following:

 

  • $1 fee for the Family Support Program
  • $16 for the DMV test
  • $42 fingerprint card fee for applicants from other states
  • $70 for each branch location
  • $80 or more for the dealer education course
  • $90 - $92 for dealer and motorcycle plates
  • $100 for the optional Autobroker Endorsement Fee for non-wholesalers
  • $175 application fee
  • $300 New Motor Vehicle Board Fee (applies to each dealership location)

FAQ

How Long Does It Take to Get a Car Auction License in California?

You can usually get a temporary license within 30 days of application submission.

What Do I Do if My License Is Denied?

Most of the time, you can apply again. Just know the application fee isn't refundable, so you'll have to pay it again.

Can I Run a Vehicle Auction Business Without My License?

Every state requires valid licensing for vehicle auction businesses.

How Frequently Is Renewal Necessary?

Annual renewals are mandatory, and wholesalers must go through continuing education every other year.

How Are Vehicle Dealer Bond Claims Actually Paid?

Surety bond agreements bind three parties: the DMV, the dealer, and the bonding company. Valid claims are paid on behalf of the principal before debt reimbursement.

Whether you're looking for how to get a wholesale dealer license or another kind of vehicle license in California, the state is a huge market for buying and selling new and used vehicles. You'll be able to generate side income or use it as your primary source of business.

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About Lance Surety Bonds

Lance Surety Bond Associates, Inc. is a surety bond agency based out of southeastern Pennsylvania that is able to write all surety bond types in all 50 states. We are dedicated to servicing all of our customers' surety bonding needs throughout the country and guarantee competitive rates, timely responses, and unparalleled customer service.

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