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

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 closed 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. Take The Required Dealer Pre-License Training Class (California DMV Approved)

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 Instructor who is a Licensed Dealer. You can use your smartphone, tablet, or computer. After registering, you’ll receive your clickable link to start your training. Got questions? You can reach us by Chat, email, or telephone. Your DMV Certificate of Completion will be sent to you the next day.

  • Online Home Study – complete the training on your schedule, at any time of day
Get Started

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 are required to have an approved commercial office.
  • 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.

Retail and Wholesale Location Requirements

3. Decide – Corporation, LLC, Partnership, or Sole Proprietor?

You can apply for your 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 Officers that will be active in the operation of your Dealership. You can learn more about establishing your Corporation or LLC here:

Name Your Business

You will need a business name for your license, bank account, and various permits. If you plan to operate your Dealership using a name other than the actual Corporation, LLC, or personal name, you must file a Fictitious Name Statement (also known as a DBA) at your local County Recorder’s office.

4. Set up your Online DMV Application account

You’ll need a free 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. Create an Occupational DMV Account

5. Get a Live Scan

“Live Scan” is a fingerprinting service where your fingerprints are sent to the Department of Justice for a criminal background check. The DMV requires this scan to uncover past criminal activities 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

Once you have your DMV Certificate of Completion from us, you can schedule your test online through your MyDMV account. The DMV will require you to upload a copy of your Certificate as proof that you have completed your training and understand the DMV regulations and requirements.

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. 

Take the Test at The DMV Occupational Licensing office

Pass the test at the DMV Occupational Licensing Office where you scheduled, and bring your original Certificate. You will need a score of 70% or higher (28 correct answers from 40 multiple-choice questions). You are allowed three attempts to pass.

7. Open a Bank Account

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

8. Secure a Location (and your 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 it complies with the DMV’s requirements.

  • Wholesale Dealers must have an office, and it may be located in a residence or commercial location. The 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.
  • Retail Dealers are required to 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. The display area must be large enough for at least one vehicle and 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, or Tax Certificate.

10. Seller’s Permit from the CDTFA

Both Retail and Wholesale California Auto Dealers must have a Sellers Permit from CDTFA (California Department of Tax & Fee Administration), which allows you to purchase vehicles you will sell tax-free. You will also need the Permit to collect taxes when you sell to Consumers. To get a Sellers Permit, you can apply online or in person at your local CDTFA office.

11. Get a Dealer Bond

Each Dealer applicant must provide a valid Dealer Surety Bond that protects consumers and the State of California from Dealers should they fail to pay their DMV fees or remit 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 cost of the Retail bond ranges based on your credit score. Wholesale bonds do not require a credit check. You can obtain a no-obligation Bond Quote using the links below.

12. Apply for Your 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. The Inspection usually takes only a few minutes. When the Inspector approves your location, they will hand you a Temporary Dealer License.

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