Steps to Becoming a Dealer

Motorsports Market Step by Step Guide

The Step by Step Guide is an additional resource we put together in response to the most frequently asked questions from our students and future dealers. A ‘how to’ that walks you through the license application process listed below step-by-step, form-by-form, explaining in practical terms where to go, what to do, and how much it will cost for each step required to meet the DMV dealer license application requirements. The guide also contains a copy of a complete dealer license application that the DMV has already approved, so you can see exactly what a successful application looks like. A great resource to help expedite you in successfully completing each step in getting your license and starting your business, the Guide has invaluable notes directly from our instructor Art on the process as a whole, such as how to find a location that passes zoning in your area, starting your bond search, and more.

The Step by Step Guide PDF $45, please email to purchase your copy.

How to Get Your California Auto Dealer License

Used Car Dealer License in California – Wholesale, Retail, Retail with Auto Broker Endorsement

Important Update: The DMV has launched their ‘Online Occupational Licensing Portals’, which will allow you to process your license application online (and in the future, renew your license online).
However, the DMV has not yet developed their digital certification system, so at this time they are still utilizing physical certificates. Upon a Pre Licensing course completion, we will mail your physical certificate to you.
You will create your Occupational Licensing account, and then upload a photo or scan of your physical certificate to your portal in order to schedule your exam with your DMV Inspector (the exam itself will still be in person).
Historically, this application process has been done by mail. It is likely that your application forms will now be available in your portal, however you will see that we have kept their original links in case they are needed.

Online Portal Links
Set up your Portal (this page also has an introductory video from the DMV for applicants that we suggest watching):
DMV Help Page:

1. Complete a DMV-approved Pre-Licensing class

This class teaches how to become a dealer, how to get into dealer auctions, how to buy and sell vehicles and prepares/certifies you for the DMV exam. We cover dealer bonds, different license types, location and office requirements, the application process and more.
Classes and registration.

2. Pass a 40-question test with your nearest DMV Inspector – this is different than the main DMV offices.

The fee is $16.00. The Pre-Licensing Class will prepare you for this test. You will complete your certificate test during our class to ensure you are ready. You will upload your certificate to your OL portal to show proof of Pre Licensing completion and to schedule your exam.
Sample Test Questions

3. Download and complete the dealer license application forms

The application fee is $176. These forms may be available directly in your OL portal.
Dealer Application Forms

4. Select a location for your dealership & take photos

Your location type will depend on your business type – wholesale or retail. To obtain a wholesale dealer license all you need is an office. To obtain a retail dealer license, you will need an office, a display area big enough for two vehicles, and a two foot square sign with your name and address on it, posted permanently outside. Auto Brokers need an office and a sign, but no display area. These location requirements are covered in detail in class, including ways to overcome obstacles, and in some cases, even allowing for home offices.

5. Apply for a fictitious business name (if you want one)

If the name of your dealership will be something other than your personal name (example: “West Coast Auto Sales”), you will need to file a fictitious business name statement with your local County Recorder’s Office. You can often find your county’s filing procedure and forms by searching for “Fictitious Business Name Filing” on-line and adding the name of your county to the search terms. Basically, you will publish a notice in a local paper for 30 days advising that you are doing business under the name you select. After 30 days you send proof of that publication to the Recorder for filing. Costs are under $100 if you do it yourself, or $175 to have a service do it.

and Apply for a local business license

You can obtain a business license at your local city or town offices in their tax and license division. Some cities have applications on-line. Fees are often a small percent of your annual gross sales. For example, in Oakland the license fee rates are forty cents ($.40) for each one thousand dollars of gross receipts, or gross payroll, with a minimum fee of $74.00 if total annual gross receipts are less than $ 74,000.00.

and Corporation/Partnership/LLC paperwork

If you are one of these types of entities you will need to provide a copy of your articles of incorporation, corporate minutes, or other documents showing officers, shareholders and managers with a 10% or greater interest in the business with your dealer license application. If you are the only owner (sole proprietor) you do not need to complete this step.

6. Get your dealer bond

The DMV requires dealers to get a $50,000 surety bond. The going rates generally range between $1,000 – $1,500 per year for a $50,000 bond. If you have very good credit, or purchase a bond for a two or three year period, the rates are less. Established dealers with good credit, no complaints on file with DMV, and no court judgments against them, often pay half these rates or less. Note that motorcycle-only dealers and wholesale dealers selling less than 25 vehicles per year need only a $10,000 bond. Going rates for a $10,000 bonds generally vary between $200 and $300 per year.
List of Bonding Companies

7. Get “live scan” fingerprints

“Live Scan” is an inkless electronic fingerprinting process where your fingerprints are electronically transmitted to the Department of Justice for completion of a criminal background check. The costs generally range from $40.00 to $60.00.
Live Scan Locations

8. Apply for a seller’s permit

The Dept. of Tax and Fee Administration (“DTFA”) has taken over issuing Seller’s Permits from the Board of Equalization. The link below will take you to the Online Services Portal, on that page select, ‘Register A New Business Activity’, this will take you to the online Sellers Permit application questionnaire.

From there provide the requested information until the form is done. Then, print out two copies of the Sellers Permit. One you will hang in your office, the other you will include with your dealer license application.
Sellers Permit Application

9. Take and print photos of your location

10. Make a copy of your CA ID or driver’s license

11. Obtain a signed copy of your lease or rental agreement

This will be submitted with your dealer license application. If you own the property, proof of ownership may be required. Your local DMV Inspector will let you know.

12. Submit the previous step for a completed application for approval

13. Make a payment to DMV for $176, plus additional fees for dealer plates (you should be able to make this payment in your portal at this time).

14. Turn in your application packet for your DMV Inspector for review

Historically you would mail your packet to your local Inspector. At this point, you should be able to submit your application online in your OL portal.

15. Inspection

After reviewing your application, you and your Inspector will set up at time to meet you at your location to inspect the premises. The Inspection is not a surprise and usually takes five minutes or less. This final step is often the easiest because you will have already met the physical location requirements in order to complete your application. When the Inspector has finished looking around, he or she will hand you a temporary license and you are ready to go! You will receive your formal license in the mail.