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 a 5-Star rated, DMV Approved Trainer and we’ve helped thousands of people just like you to get their California Dealer License. They can now access auctions and wholesale deals that would otherwise be closed to them.
Learning 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 all of these topics (and more), during our online course.
1. Take The Required Dealer Pre-License Training Class (California DMV Approved)
California requires anyone wanting a Wholesale or Retail Dealer License to take a “Pre-Licensing Class”. Industry experience or additional preparation is not required to take the course. By completing the one-day (6 hours) training first, you can save a lot of wasted time and expense.
Register for your Pre-License Dealer Training
Get started today and register for a training date that fits your schedule.
What to Expect
Our DMV Certified class is 100% online and led by a DMV Certified Instructor. You can attend and interact with the Instructor via chat using your smartphone, tablet, or computer. No camera or microphone is required.
After registering, you will receive your clickable link to join the class, a detailed course Dealer Study Guide.
We will go over the Study Guide from start to finish and you will have a Chat where you can ask the Instructor any questions.
After the class, you will receive a recording of the entire class that you attended. Your DMV Certificate of Completion will be sent to you, the following business day.Check Class Schedule
2. Take the DMV Dealer Test
The California DMV requires that you pass an in-person, test at the DMV office.
Who Needs to Take the DMV Dealer Test?
- a Corporation, one member of the Corporation must pass the test
- as an Individual, that one person must pass the test
- as a Partnership (without a Corporation), both partners must pass the test.
Schedule Your Test at the DMV
Once you have your DMV Certificate of Completion from us, you can call your nearest DMV Occupational Licensing office to schedule your test. The DMV requires the 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 many times as you like, at no cost.
Take the Test at The DMV
Make an appointment at your nearest California DMV Occupational Licensing Office. To pass, you will need a score of 70% or higher (28 correct answers from 40 multiple-choice questions). You are allowed 3 attempts to pass.
3. Decide on a Dealer License Type
California has two types of Dealer licenses for selling pre-owned vehicle; Retail and Wholesale. A Retail Dealer License permits you to sell vehicles to the public, other Dealers or at auctions. Retail Dealers are required to have an approved office and “car lot” where they are allowed to display vehicles for sale. A Wholesale Dealer License permits you to sell to other Dealers or auction but not to the public, in California. The DMV allows Wholesale Dealers to operate their business from a residence and are not required to have a commercial office or “car lot”. Some Wholesale Dealers work in partnership with a Retail Dealer who has already met the State’s requirements. Essentially you would be working as a Dealer under a Dealer to sell through to consumers. Both Retail and Wholesale Dealers may buy vehicles from any source including Dealer-only auctions.
4. Name Your Business
You will need a business name for your license, bank account, and various permits. Consider something that explains what you do, like “ABC Wholesale Auto Sales” or something similar. If you plan to operate your Dealership using a name other than your Corporation or personal name, you must file a Fictitious Name Statement (known as a DBA) at your local County Recorder’s office.
5. Decide – Corporation or Sole Proprietorship?
You may apply for your Dealer License as a Corporation (S-Corp or LLC) or as a Sole Proprietorship (a private individual). If you decide to set up your Dealership as a Corporation, you need to supply the DMV with documents showing Officers that will be active in the operation of your Dealership.
6. Secure a Location
Retail and Wholesale licenses both require a physical place of business that houses your accounting and business records. A Wholesale Dealer’s office may be located in a residence or commercial location. The home office must directly accessible from outside, on the ground floor. For example, walking through the kitchen to reach the office would be unacceptable. Retail Dealers are required to have a commercial office dedicated to your 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”. A representative from the California DMV may inspect a potential Wholesale location. They will definitely visit a Retail location prior to conducting an inspection.
7. Get a 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. In your area, this license may be called a Business License, Certificate of Occupancy License, or Tax Certificate.
8. Get a Seller’s Permit from the CDTFA
Both Retail and Wholesale California Auto Dealers must have a Sellers Permit from CDTFA. To obtain a Sellers Permit, you can walk in your local CDTFA office (California Department of Tax & Fee Administration) to obtain a Sellers permit, which allows you to collect taxes. You can learn more and apply online here.
9. Open a Bank Account
Retail and Wholesale Dealers must open and maintain a bank account in the name of the dealership. You must give the DMV permission to confirm your bank account by signing the DMV’s “Authorization to Release Financial Information” form in the Application Package.
10. 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 fail to pay their DMV fees or remit sales taxes they collected. Retail Dealers must obtain a $50,000 bond. Wholesale, motorcycle and ATV Dealers require a $10,000 Bond. The cost of the bond typically ranges based on your personal credit score. You can obtain a no-obligation Bond Quote using the links below.
11. 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 that may preclude 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.
12. Prepare & Submit Your Application
For either license type, you’ll need to complete a “Used Dealer Application”. The DMV has a great Checklist that details everything you need to include with your application. We recommend that you drop off your completed application in person at your nearest DMV Occupational Licensing Office. You’ll meet your local DMV Inspector(s) there and can set up 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 them.Application Forms & Instructions
13. Host the DMV Inspection
After reviewing your application, your Inspector will contact you to coordinate a meeting with you to inspect the premises. The Inspection usually takes only a few minutes. When the Inspector approves your location, they will hand you a Temporary Dealer License.
As you can see, it’s not difficult to get a car Dealer’s License in California. It’s a process that we have helped many people navigate to obtain their licenses and start their own business. Ready to get started? Register for one of our online, instructor-led, DMV Authorized, Dealer Pre-License courses. Questions? Contact Us