If you’re looking to enter the automotive business in California as a used car dealer, obtaining a used car dealer license is a key requirement. This license not only allows you to sell vehicles but also gives you access to exclusive dealer auctions where you can buy cars at wholesale prices. In this blog post, we’ll walk through the steps you need to follow to get your used car dealer license in California, and the benefits of having a wholesale license.
Why You Need a Used Car Dealer License
In California, anyone selling more than five vehicles in a calendar year is required by law to have a used car dealer license. This license opens doors to dealer auctions, which are where most car dealers buy their inventory at lower, wholesale prices. It also establishes you as a legitimate business, which helps build trust with customers and suppliers.
Step-by-Step Process to Get a Used Car Dealer License in California
Here’s a breakdown of the steps involved in obtaining your California used car dealer license:
1. Prepare Your Business Location
To qualify for a used car dealer license, you must have a physical business location. This must comply with California’s Department of Motor Vehicles (DMV) regulations, including:
- A permanent office
- A display area for vehicles
- Adequate signage that complies with local zoning laws
Your location will be inspected by the DMV, so make sure everything is in order before proceeding.
2. Complete a Dealer Education Program
California requires all prospective used car dealers to complete a California DMV-approved Dealer Education Program. These courses cover important topics like state regulations, compliance issues, and how to run a dealership.
This training ensures that you understand the legal obligations and responsibilities that come with holding a used car dealer license.
3. Submit a Car Dealer License Application
Once you’ve completed the education program, you need to fill out and submit the Application for Original Occupational License (OL 248). The application will ask for various business details, including:
- The type of business (sole proprietorship, partnership, LLC, etc.)
- Business location and ownership information
- A list of any partners or associates in the business
Be prepared to provide thorough documentation and submit to a background check.
4. Obtain a Surety Bond
A surety bond is a requirement for all California used car dealer licenses. This bond protects consumers in case your business fails to meet legal obligations. The bond amount for a retail or wholesale dealer is $50,000, but the actual cost will depend on your credit history and other factors. You can obtain the bond through a licensed surety company.
5. Pay All Required Fees
When submitting your application, you’ll need to pay several fees, including:
- An application fee
- Fingerprint processing fee for a background check
- A fee for the Automated License Plate Reader (ALPR) compliance, if applicable
Make sure to check the current fee structure on the DMV’s website to ensure you pay the correct amount.
6. Submit to LiveScan Fingerprinting
California requires all applicants to complete a LiveScan fingerprinting process. This is part of the criminal background check to ensure that only qualified, trustworthy individuals are granted a used car dealer license. You can have this done at any California-approved LiveScan location.
7. Pass a DMV Inspection
After your application is submitted and your location is ready, the DMV will schedule an on-site inspection. They will check that your location meets the required criteria and verify your documentation. Once approved, the DMV will issue your California used car dealer license.
8. Register with the Board of Equalization
Lastly, you’ll need to register your dealership with the California Department of Tax and Fee Administration (CDTFA). This ensures you can collect sales tax on vehicle transactions and properly report income from sales.
Benefits of Having a Wholesale Dealer License
One of the major perks of getting your used car dealer license is gaining access to dealer auctions. These auctions are where dealers purchase vehicles at wholesale prices, allowing you to:
- Access a wide range of inventory: From sedans to trucks, you’ll find various vehicle types.
- Maximize your profits: Purchasing cars at lower prices gives you a better margin when you resell them.
- Expand your business: Wholesale auctions are ideal for growing your inventory without overpaying.
With your wholesale license, you’ll be able to attend these exclusive dealer auctions, making it much easier to stock up on high-demand vehicles and boost your dealership’s profitability.
Final Thoughts
The process of obtaining a used car dealer license in California is detailed, but it’s well worth the effort. Not only does it legitimize your dealership, but it also opens up access to dealer auctions where you can buy vehicles at wholesale prices. By following the steps outlined in this guide, you’ll be on your way to running a successful used car dealership.
Interested in unlocking dealer-only auctions and more? Stay tuned for more tips and resources for used car dealers and how to grow your business with insider access to the best car deals.