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How to Become a Car Dealer in Texas

Are you interested in the automotive business, or currently work for a car dealer, and want to become an independent dealer with your own car business?  The list below contains a step by step guide on how to become a used car dealer in Texas.  

You can also find an online course to help explain everything you need to know at https://www.howtobeatexascardealer.org/
Texas Automobile Dealer License: A Guide to all the steps necessary to obtaining your Texas dealers license
Licensing steps

Auto dealer licenses are handled by the Texas Department of Motor Vehicleshttps://www.txdmv.gov/

Determine Which Type of License You Need:
  • GDN License: Authorizes you to sell used vehicles in one of the following subcategories:
    • Motor Vehicle: Buy/sell any type of used motor vehicle other than motorcycles, utility trailers and semi-trailers
    • Motorcycle: Buy/sell any type of motorcycle, motor scooter or ATV
    • Wholesale Dealer License: Sell used vehicles only to other licensed dealers
    • Independent Mobility Motor Vehicle: Sell new vehicles equipped to transport a person with a disability
A dealer selling used vehicles in more than one of these categories must hold the respective GDN license for each type of vehicle. More information on trailer and auction license categories can be found in the dealer manual.
  • Franchised Dealer License: Authorizes you to sell new vehicles
Set Up Your Business
Before applying for your license, you need to legally form your company and provide a certification of incorporation, organization, or partnership. If your company is a corporation, limited partnership, limited liability partnership or limited liability company, you must submit a copy of your approved certificate of formation or certificate of authority issued by the Texas Secretary of State.
If you are a franchise dealer, you must also obtain a franchise license.
Obtain a Permanent Business Location
Before you apply for your license, you must establish a permanent business location with the following requirements:
  • Located in a building which has connecting exterior walls on all sides
  • Compliant with all applicable local zoning ordinances and deed restrictions
  • May not be located within a residence
  • Must have a valid mailing address
  • An office with, at minimum, a desk, two chairs, internet access and a working telephone listed in the business name or assumed name under which the dealer does business
  • A clearly visible, permanent sign with letters at least six inches in height showing the business' name
  • An adequately illuminated on-site display area with enough space for at least five vehicles
  • The location must be owned by the dealer, or have a written lease agreement for the property for the term of the license
  • The business must be open at least four days per week and for at least four consecutive hours during each of those days. The hours must be posted at the main entrance
  • The telephone must answered from 8:00 a.m. to 5:00 p.m. weekdays by an employee or answering service
Obtain Your Auto Dealer Bond
The cost of an auto dealer bond is a small percentage of the total bond amount. The bond cost varies depending on your financial strength, e.g. personal credit. All dealers must purchase a bond to get licensed. Your bond must be valid for the full two-year license period.

Bond Amount Required:
  • $25,000
 Compile the Required Documents
In addition to your business incorporation, location and bond documents, your application should contain the following:
  • Proof of identity: A photocopy of a current driver's license will suffice
  • Assumed name certificates for the business if operating under an assumed name
  • A detailed map of your location
  • Dealer development stores must show documentation that the business meets the requirements of Occupations Code §2301.476 and 43 TAC §215.113; contact the Texas Department of Motor Vehicles for more details
  • An application for eTAGS, included in the application packet
Submit Your Dealer License Application
Mail the completed application forms to:
Texas Department of Motor Vehicles
Motor Vehicle Division
P.O. Box 26487
Austin, TX 78755
(512) 465-5634
The form can also be submitted by e-mail to MVD-scancenter@TxDMV.gov
Fees:
  • $350 license fee
  • $700 General Distinguishing Number License Fee
  • $90 for each dealer license plate
Fees can be submitted by credit card payment.
Note: All licenses are valid for two years from their start date. Once you have received your license, it must be displayed in a conspicuous place at each place of business.

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