How to Be a Texas Car Dealer
Thinking of becoming an independent dealer in Texas? You came to the right place! We have compiled a list of some questions you might have, along with the answers that will help you in your decision of becoming an independent auto dealer in Texas.
Future Dealer Questions:
Do I need a license?
If you are at all serious about the business, then YES. An individual is allowed to sell up to four vehicles per year without a dealer’s license – kind of tough to make any money that way, huh? Plus, every one of those vehicles has to be titled in YOUR name before you sell it. Why does that matter? Because that means you will be paying 6.25% in sales tax on each vehicle you buy – BEFORE you sell it! Licensed dealers do NOT pay sales tax on vehicles they acquire for their inventory.
So, what do I need to get my license?
On the most basic level, you’ll need a physical location for your dealership that meets the state’s premises requirements, and a dealer surety bond in the amount of $50,000. Dealer licenses are $700 + dealer plates and are issued for two-year terms. The licensing application, as well as additional reference materials, can be found on the TxDMV website.
There’s got to be more to it than that, right?
Oh yes, most definitely. A LOT more. And you will find most of the answers in the required pre-licensing education course that you can take on TexasDealerEducation.com. There you will also find a healthy dose of Q&As about obtaining your independent dealer’s license.
I heard I could just sell under another dealer’s license instead of getting my own...true?
Well, you could...however, it is illegal and could result in civil proceedings being brought against you by TxDMV, the OCCC, or both. Maybe worse, either agency could then oppose you ever getting your legitimate license. So DON’T DO IT.
I just want to sell cars online, I don’t want to mess with getting a location or license...how can I do that?
You can’t. Under Texas law, you are required to have a licensed location to sell vehicles. If you don’t, law enforcement can (and will) seize your vehicles, impound them, and not release them without proof of ownership in YOUR name on the front of the title. So, get your license, join TIADA and get on the good guys’ team!
Who do I use for insurance, dealership management software, service contracts, floor planning...and everything else?
Great questions. TIADA does not endorse any specific providers, but TIADA members can search our Membership Directory in each category to see what companies are also members. It's one of the perks of membership. You should also have a look at our Business Partners.
Can I be a TIADA member?
Sure! But the association is focused on licensed dealers. You can join today and, once you get your P number, we will be glad to add it to our system.