How to Get a Texas Dealer License

Published: Mar 30, 2021
how to get a texas dealer license

 

Are you thinking of launching an auto dealership in Texas? To start this new business endeavor, you need to obtain a Texas dealer license from the Texas Department of Motor Vehicles (DMV). 

The licensing process entails meeting a list of requirements set by state authorities that ensure your legal compliance. 

Here is a thorough overview of how to get a dealer license in Texas.

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1. Pick your Texas Dealer License Type 

Your first step is to select the type of Texas auto dealer license that you would like to obtain. 

All dealer license applicants in the state must obtain a general distinguishing number (GDN), also known as an independent license.

When applying, you must select the exact type of license that you want to get. If you wish to be able to sell multiple types of vehicles, you must submit a separate application for each type.

texas dealer license types

Licenses available under the independent license category include: 

  • Independent Motor Vehicle – can sell, buy or exchange used cars, trucks, motor homes, and neighborhood vehicles
  • Independent Motorcycle – can sell, buy or exchange used motorcycles, scooters, and ATVs
  • Travel Trailer – can sell, buy or exchange used trailers
  • Trailer/Semitrailer – new or used utility trailers and/or semitrailers
  • Wholesale Dealers – can sell or exchange vehicles only with other licensed dealers
  • Independent Mobility Motor Vehicle Dealer – can sell new mobility vehicles

In addition, if you wish to sell new vehicles, you must apply for a franchise dealer license. For example, if you want to sell new cars, you need to get an Independent Motor Vehicles license first and then obtain a franchise dealer license.  

2. Get to know the Texas Dealer License Requirements

The Texas DMV is the licensing authority in the state. Getting a dealer license in Texas means that you have to meet all of its requirements.

As part of the application process, you will need to ensure that your dealership location complies with all the local zoning ordinances. It must also comply with the DMV’s requirements for dealership premises. A full list of the office and premises requirements is available through the DMV’s Motor Vehicle Dealer Manual.

texas dealer license requirements

In addition, the set of documents that you have to provide for all license types includes: 

  • Business entity documents – a certificate of formation, incorporation, or registration with the Texas Secretary of State
  • Assumed name certificate (DBA), if applicable
  • Business owners information
  • Copy of the IDs of all owners and general partners
  • Employer Identification Number (EIN) registration from the IRS(if your entity is a partnership, corporation, limited liability company, or limited partnership) 
  • Proof of lease or ownership of your business location
  • Proof of compliance with local zoning requirements for your business location
  • Proof of meeting the business location requirements (display area, office space, and business sign) 
  • A copy of your $25,000 Texas auto dealer surety bond
  • Franchise agreement (for franchise dealers only) 

 

Finally, all applicants for an independent motor vehicle GDN must take pre-licensing training. This does not apply to applicants for other dealer license types. 

3. Obtain а Texas Auto Dealer Bond 

Most types of dealers in Texas have to get a surety bond to get licensed. 

You don’t need to get bonded if you are a franchise dealer, or if you are an independent dealer who wants to sell travel trailers or trailers and semitrailers. 

The required amount of the Texas auto dealer bond is $25,000

To get bonded, you need to cover a small percentage of that amount. It is called your bond premium and is determined based on the strength of your personal and business finances. If they are in good shape, you can expect rates in the range of 1% to 3%.

Do you want to find out the exact cost of your auto dealer bond? Fill in the short form below! 

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4. Apply with your full document set

Once you have met all of the above requirements, you need to complete the Texas dealer license application form through the DMV’s eLicensing platform. You have to attach all the required documents there.

If you need more than one license type, you need to submit separate applications for each of them. 

The relevant licensing fees that you have to cover include: 

texas car dealer fees

  • $700 Texas dealer license cost per each independent license (GDN)
  • $350 franchise dealer license fee
  • $90 fee per dealer plate

If you have any further questions about applying for a Texas dealer license, make sure to check the relevant eLicensing User Guide for your particular license type.

5. Renew your license

The Texas dealer license renewal is due every two years.

To meet the licensing deadline, you have to apply for renewal no later than 45 days before the license expiration date. You need to renew your bond as well. Typically, you will receive an email in advance, notifying you of the approaching deadline. 

Along with the renewal documents, you will need to pay renewal fees in the following amounts:

  • $400 per GDN
  • $350 – $1,500 for franchise dealers (depending on sales)
  • $90 for plates/stickers

Do you need further details about the Texas car dealer license and bonding requirements?

You can reach our bonding experts by calling us at 877.514.5146.

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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.