How to Get a Car Dealers License in California (12 Steps)

Table of Contents

If you want to access dealer-only auctions and sell (or flip) even one vehicle in California for profit, you are legally required to have a dealer license. Dealer 101® is 5-Star rated and provides DMV Approved training programs. We’ve helped thousands of people like you get their California Dealer licenses. They can now access auctions and wholesale deals not available to the public. Figuring out how to get a vehicle dealer’s license in California can be confusing, and we can help. We put together this step-by-step guide that explains how easy it is to get your dealer’s license in California. We cover these topics (and more) during our online courses.

1. Pre-License Dealer Training Class

The first step is to take the Dealer Pre-License Training Class. This program is approved by the DMV and required to get your California Dealer License.

The California DMV requires anyone wanting a Wholesale or Retail Dealer License to take a “Pre-Licensing Class.” No industry experience or additional preparation is needed. By completing the 6 hours of training first, you can save a lot of wasted time and expense. Our DMV Approved class is 100% online and prepared by an experienced team and presented by an instructor who is a Licensed Dealer. Got questions? You can reach us by Chat, email, or telephone. Your DMV Certificate of Completion will be sent to you the next business day.

Online Home Study

The online course is made up of 33 lessons with a short video, notes, and two practice questions for each lesson. There is no time limit and you can start and stop at any time. Your progress is always saved. You can use your smartphone, tablet, or computer. After registering, you’ll receive your clickable link to start your training.

Start the DMV Training

2. Decide on a Dealer License Type

California has two types of Dealer licenses for selling pre-owned vehicles; Retail and Wholesale.

  • Retail Dealers can access dealer-only auctions, sell to other Dealers -and- sell vehicles to the public. Retail Dealers must have an approved commercial office (not in a residence).
  • Wholesale Dealers can also access dealer-only auctions and sell to other Dealers but not the public. Wholesale Dealers may work from a home office. Some Wholesale Dealers work with a Retail Dealer to sell to their vehicles to consumers.

In California, a Broker is not a license type. It is an addition to a Retail license that allows you to sell vehicles that other dealers have in stock.

Retail and Wholesale Location Requirements

3. Name Your Dealership

You can apply for a California Dealer License as a Corporation, LLC, Partnership, or Sole Proprietorship (a private individual). If you decide to set up your Dealership as a Corporation or LLC, you need to supply the DMV with documents showing who will be active in the operation of your Dealership. If you plan to operate your Dealership and not use your “real” Corporation, LLC, or personal name, you will need a Fictitious Name Statement (also known as a DBA) that can be obtained at your local County Recorder’s office.

Benefits of choosing a Corporation or LLC

  1. Only one person takes the Pre-License Training
  2. Multiple people can be on your Dealer License
  3. More people can use Dealer Plates for personal use

You can establish your Corporation or LLC online by visiting Inc Authority. The state filing is only $1.

Create an LLC or Coporation

4. Set up your Online DMV Application account

You’ll need a free California MyDMV account and start your application for your Dealer License. If you already have a MyDMV account, use the same email address associated with that account when applying for your license.

Application Help
Access DMV Application

DMV Technical Support is available by calling (877) 563-5213

5. Get a Live Scan

“Live Scan” is a fingerprinting service that sends your fingerprints to the Department of Justice for a criminal background check. The California Occupational DMV requires this scan for everyone that will be “active” on the license to uncover convictions within the past 10 years that may prevent you from obtaining a license. If you’re unsure if your background check will pass DMV standards, you can submit an Abbreviated Application for DMV review.

6. Pass the DMV’s Dealer Test

The California DMV requires that you pass an in-person test at the DMV office.

  • If applying as a Corporation or LLC, one member must pass the test
  • If applying as an Individual, that one person must pass the test
  • If applying as a Partnership (without a Corporation or LLC), all partners must pass the test.

Schedule Your In-Person Test

After you have completed Steps 1-5 and you have uploaded your DMV Certificate of Completion, the DMV will “enable” your account to schedule your test online through your MyDMV account.

Practice For Your Test at Dealer 101

We have an excellent (free) online Practice Test to ensure you’re ready to visit the DMV. You can repeat our Practice Test as often as you like, at no cost. You can also go back through your Pre-License Dealer Training.

Take the Test at The DMV Occupational Licensing office

Pass the test at the DMV Occupational Licensing Office where you scheduled with a score of 70% or higher (28 correct answers from 40 multiple-choice questions). You are allowed three attempts to pass. You can take the test 3 more times by retaking the training at no additional charge.

7. Open a Bank Account

In California, Retail and Wholesale Dealers must open and maintain a bank account in the name of the Dealership. The DMV will verify your bank account, not your balance or credit rating.

8. Secure your Location / Dealer Address

Retail and Wholesale licenses require a physical place of business that houses your accounting and business records. At the DMV’s discretion, a California DMV Inspector may visit your location to verify the location meets the DMV’s requirements.

  • Wholesale Dealers must have an office that may be located in a residence or commercial location. A home office must be on the ground floor and directly accessible from the outside. For example, walking through the kitchen to reach the office would be unacceptable. You can often use your garage as your office.
  • Retail Dealers must have a commercial office dedicated to their dealer business, a two-foot square sign with your name and address posted permanently outside, and a display area (large enough for at least one vehicle) reserved as a “Display Area Only.”

9. City Business License

If required in your area, you must obtain a Business License at your local city or town office’s Tax or License division. This license may be called a Business License, Certificate of Occupancy, Tax Certificate, etc.

10. Seller’s Permit from the CDTFA

All Dealers must have a Sellers Permit from the CDTFA (California Department of Tax & Fee Administration), which allows you to purchase vehicles for resale, tax-free. You will also need the Permit to collect taxes when you sell vehicles to Consumers. You can apply for your Sellers Permit online or at your local CDTFA office.

11. Get a Dealer Bond

All Dealers must have and maintain one Surety Bond (often called a Dealer Bond). The Bond protects consumers and the State of California from Dealers that don’t pay the DMV fees or sales taxes they collected. Retail Dealers must obtain a Bond with a $50,000 value. Wholesale and Motorcycle/ATV Dealers require a $10,000 Bond. The Retail bond cost will vary based on your credit score. The Wholesale bond price does not require a credit score. Get a no-obligation Bond Quote using the links below.

12. Apply for Your California Dealer License

Prepare & Submit Your Application

You’ll need to complete the online application you started in Step 4. After applying online, you will be able to schedule an appointment for your location inspection. We have an excellent program that includes all the required DMV forms and step-by-step video instructions on how to complete the process.

Application Forms & Instructions

Host the DMV Inspection

After reviewing your application, your Inspector will enable your account to schedule your inspection which usually takes just a few minutes. The Inspector will hand you a Temporary Dealer License when your location is approved.

Summary

As you can see, it’s not difficult to get a Car Dealer’s License in California if you stick to the steps provided. It’s a process that we have helped many people navigate to obtain their licenses and start their businesses. Ready to get started? Register for one of our online DMV Authorized Dealer Pre-License courses. Questions? Contact Us