How to Get a Dealer’s License in California: Step-by-Step Guide for 2024
How to Get a Dealer’s License in California: Step-by-Step Guide for 2024
Blog Article
If you are interested in starting a car dealership or selling vehicles in California, you will need to obtain a dealer’s license to operate legally. The process to get a dealers license in California involves several steps, from completing the required forms to meeting specific state regulations. This guide will provide a comprehensive overview of how to get a dealer’s license in California, helping you navigate the process efficiently.
Why You Need a Dealer’s License in California
In California, selling more than five vehicles in a year without a dealer’s license is illegal. A dealer’s license allows you to sell new or used cars, trucks, motorcycles, or other vehicles, and it gives you access to essential tools like dealer-only auctions and discounted rates on vehicle purchases. Whether you plan to open a dealership or expand your current business, getting a dealer’s license in California is a crucial first step.
Types of Dealer’s Licenses in California
There are several types of dealer’s licenses available, depending on the type of vehicles you want to sell. The most common types include:
New Vehicle Dealer License: Allows you to sell new cars or vehicles directly from manufacturers.
Used Vehicle Dealer License: Permits the sale of pre-owned vehicles.
Wholesale Dealer License: Authorizes the sale of vehicles to other licensed dealers, not the general public.
Motorcycle Dealer License: For selling motorcycles or all-terrain vehicles (ATVs).
Auto Broker Endorsement: Allows licensed dealers to act as brokers in vehicle sales.
Choosing the right license is the first step in how to get a dealer’s license in California. Make sure you apply for the license that fits your business model.
Step-by-Step Process to Get a Dealer’s License in California
1. Complete the Pre-Licensing Education Program
One of the first steps to get a dealer’s license in California is completing the Pre-Licensing Education Program. This six-hour course is mandatory for used car dealers, covering essential topics such as California dealer laws, DMV regulations, and business ethics. The certificate you receive upon completion is valid for one year and must be submitted with your application.
2. Secure a Business Location
To get a dealer’s license in California, you must have a physical business location that meets specific state requirements. The location must:
Be zoned for vehicle sales.
Have a designated display area for vehicles.
Include a permanent business sign.
Be accessible to the public during regular business hours.
Have a lockable office space.
Ensure that the location complies with local zoning ordinances and that it meets the California DMV’s standards for dealer operations.
3. Apply for a Surety Bond
A surety bond is a financial guarantee that protects customers in the event of fraud or unethical business practices. To get a dealer’s license in California, you must obtain a surety bond of $50,000. The cost of this bond depends on your credit score and financial history, but it typically ranges from $500 to $2,000 annually.
4. Complete the Application Package
The application package to get a dealer’s license in California includes several forms that need to be accurately completed and submitted to the California Department of Motor Vehicles (DMV). Key documents required are:
OL 12 Form: Application for Original Occupational License.
OL 29 Form: Personal History Questionnaire.
Proof of Business Location: Zoning approvals, lease agreements, or property ownership documents.
Proof of Insurance: General liability and workers' compensation insurance (if applicable).
Live Scan Fingerprint Submission: Background checks for all business owners, partners, and corporate officers.
Make sure you double-check the entire application to avoid delays.
5. Pay the Required Fees
The cost to get a dealer’s license in California varies depending on the type of license you are applying for. Basic fees include:
Application Fee: Around $175.
Fingerprint Processing Fee: $42.
Pre-Licensing Education Fee: Varies by provider.
Surety Bond Cost: $500–$2,000 annually.
The total cost can range between $1,000 and $2,500, depending on the specifics of your application.
6. Pass a Location Inspection
After submitting your application, the California DMV will schedule an inspection of your business location. The DMV inspector will verify that your location meets all the requirements, including signage, office space, and the vehicle display area. To pass the inspection, make sure everything is set up correctly and is in compliance with state regulations.
7. Receive Your Dealer’s License
Once your application is approved and your business location passes the inspection, you will receive your dealer’s license from the California DMV. You are now authorized to sell vehicles legally in the state.
Common Mistakes to Avoid When Applying
Inaccurate or Incomplete Application: Double-check all forms and documents to ensure that they are filled out correctly.
Unapproved Business Location: Before leasing or purchasing a property, verify that the location is zoned for vehicle sales.
Not Meeting Signage Requirements: Your business sign must meet specific standards, including visibility and legibility from the street.
Benefits of Having a Dealer’s License in California
Obtaining a dealer’s license in California offers several key advantages:
Access to Dealer-Only Auctions: You can purchase vehicles at wholesale prices.
Issuing Temporary License Plates: Legally issue temporary plates to customers.
Professional Credibility: A license gives you legitimacy and builds trust with customers.
Getting a dealer’s license in California may seem like a complicated process, but by following the steps outlined in this guide, you can navigate the requirements with confidence. From completing the pre-licensing education to passing the DMV inspection, each step is designed to ensure that you are prepared to run a legitimate and professional dealership. Make sure to stay organized, meet all state requirements, and consult with the California DMV if you have any questions. With the right preparation, you can get a dealer’s license in California and start your car sales business on the right foot.