Are you looking to access dealer-only car auctions? This guide will explain everything you need to know about obtaining the proper license to get into these exclusive auctions, including the associated costs and benefits.
What is a Car “Auction License”?
Auction license is a popular term often used to describe the specific license needed to buy and sell vehicles at Dealer-only auctions like Manheim and Copart. However, you need a vehicle Dealer License issued by your state. For example, in California, this can be either a Wholesale or Retail Dealer License issued by DMV Occupational Licensing.
Regardless of the name of your state-issued Dealer License type, you will gain access to these Dealer-only auctions across the country.
Auction License Benefits
Obtaining a Dealer License not only grants you access to Dealer-only auctions but also provides additional benefits:
- Dealer Plates allow you to drive vehicles purchased for resale for personal and business use
- No state tax or registration fees on these vehicles
- Wholesale parts from many OEM franchise dealers and automotive parts suppliers
License Required (Dealer-only Auctions)
Dealer-only car auctions are restricted to licensed dealers to ensure a secure, fast-paced, and professional environment with less competition. Unlike public auctions, Dealer-only auctions require a Dealer License to provide a more reliable experience because all participants must adhere to state regulatory standards.
These auctions offer numerous advantages, such as detailed condition reports, which help dealers make informed purchasing decisions.
Additionally, these auctions often provide in-person and online bidding options, offering flexibility and convenience. The quality of vehicles is typically higher, and the selection is more diverse, making Dealer-only auctions an essential resource for expanding your vehicle offerings while being exempt from tax and registration on your purchases.
No License Required (Public Auctions)
Public car auctions do not require a license, allowing anyone to participate. However, participants at these public locations must still pay their state sales tax and registration fees. Due to competition from general consumers, these auctions often have higher prices.
Public Sales at Dealer-only Auctions
Some big-name Dealer-only car auctions offer public sales at select locations. These auctions provide a higher-quality experience, utilizing the same facilities as their Dealer-only auctions. As a result, they offer better condition reports, a more organized environment, and additional services such as financing options and logistics support. While the competition is still higher compared to Dealer-only sales and inventory might be limited, the overall experience is more reliable and professional than other public auctions.
Other Public Vehicle Auctions
General public vehicle auctions, including government auctions, are often held at various locations and can be less structured. They typically offer less reliable vehicle condition reports, a less professional environment, and often lack additional services such as delivery options and financing. These auctions generally do not offer the same level of quality and support found in Dealer-only public access auctions.
What is the Cost of a Car “Auction License”?
The cost of obtaining a vehicle Dealer License varies by state and type of license. Generally, the costs are considered fair, especially considering the benefits. Since licensed car dealers don’t pay sales tax or registration fees on the vehicles they purchase to sell, the overall cost of the license can be significantly less than what many people are already paying.
Additionally, licensed dealers can use state-issued Dealer License Plates (also known as Special Plates) to drive their inventory for personal and business use and receive discounts on parts and services, making the license cost even more affordable.
Cost Breakdown Example
Getting a license for car auctions is cheaper than people expect. Here is a cost breakdown using a California Wholesale Vehicle Dealer License as an example:
- DMV Education: $125
- Wholesale Bond: $100/year
- DMV Application: $175
- LLC or Corporation Filing: $70
- Dealer Plate: $100/year
- Location: Home or Commercial office
Get an Auction License
Name Your Business
Before applying for your Dealer License, you will need to establish your business. Most people choose to form an LLC (Limited Liability Company) because it is relatively inexpensive and minimizes risk by separating your personal assets from your business responsibilities. Additionally, forming an LLC or corporation allows you to add and remove people from the license. You can easily create your LLC online for the same price it costs to file with the city.
Apply for a Car Auction License
Now that you know what license is needed to access car auctions, the next step is to apply for a vehicle dealer license in your state to access these wholesale auctions nationwide. Dealer 101® offers resources and links to the proper state licensing pages to help you get started.