If you buy, sell, trade or broker vehicles for profit, you need a dealer license from the Department of Motor Vehicles (DMV).

Salespeople are not considered dealers, so they don't need a dealer license, but they do need a salesperson's license.

Note: Those selling their own personal vehicle do not need a license to do so.

Top Types of Dealers

There are two types of dealers: those who sell new vehicles, and those who sell used vehicles. New vehicle dealers are franchised by the automaker and follow that company's operational policies. They are allowed to sell used vehicles, too. Dealers of used vehicles only may not sell any new cars.

Top Whom Do I Contact?

The DMV has special inspectors who review your application and issue occupational licenses, such as those for dealers. They operate out of inspector offices throughout California. Call (916) 229-3126 for general licensing questions.

Top Dealer's Handbook

Start with California's dealer application handbook available on the Internet for download. Everything you will need to know in order to apply for an automobile dealer's license is in this handy booklet.

Top Background Investigation

All automotive dealership applicants will be required to undergo a criminal background investigation. The DMV is looking for not only crimes, but examples of "moral turpitude" that suggest that someone wouldn't run an ethical dealership.

It's not cheap, but if you're not sure whether you are eligible for a dealer license in California due to a previous conviction, the DMV allows you to file an abbreviated application. You'll still pay a $150 application fee, but the state will let you know whether it would grant you a license―before you go to the trouble of setting up your business, obtaining a surety bond and so forth.

Top Dealer Applications

Whether you want to sell new or used cars (and once you have successfully completed the dealer training program, in the case of used car applicants), you will need to file an application for a dealer license. This gets complicated, because the state wants to see all sorts of documentation regarding your business. This includes proof of insurance, your business license, evidence of proper bonding, franchise agreements, photos of your dealership and other paperwork.

The application process for a dealer license is a little different for new and used vehicle dealers.

New Car Dealers

New car dealership applicants should start by downloading the DMV's New Dealer Application Checklist. This will help you gather all the paperwork you need for your application to be processed successfully.

Next, download the new car dealer application forms, packaged conveniently together.

Used Car Dealers

Before you apply for a used car dealer's license, you must attend a training program, and pass a test.

Used car dealership applicants should download the Used Car Dealer Application Checklist and the used car dealer license application.

You may also download any of the forms individually that are included in each dealer application forms packet.

Other Documentation

The following items must be also submitted with your original application packet:

• Original certificate of completion from the dealer education provider (used car dealer applicants only).

• Copy of city and/or county business license.

• Copy of resale permit from the state's Board of Equalization.

• Fictitious business name statement copy.

• Copy of the lease or rental agreement for the facility.

• Photographs of the facility showing the main entrance, the sign, the vehicle display area and a general image of the location.

Processing Time

It can take up to 120 days to process your dealer license application and run a background check. The DMV lets you check your license status, though.

Top Fees

The dealer licensing fees are as follows:

• $150 nonrefundable initial application fee

• $1 Family Support Program fee

• $70 for each branch location

• $225 New Motor Vehicle Board fee

• $41 for each automobile dealer plate (optional)

• $43 for each motorcycle dealer plate (optional)

The California DMV also provides other occupational licensing forms that might be required for a dealership.

Top Renewing your Dealer License

You will need several documents in order to renew your automobile dealer's license in California, including the renewal form. You should receive a renewal notice with this form about 90 days before your license expires.

• Your license expires annually.

• Every two years, you also must supply proof of continuing dealer education.

• Send your renewal application and other documentation to the address listed on the back of the form.

Top Further Information

The California DMV provides a very thorough FAQ page for dealers that gives you even more details about not only applying for a dealer license, but also running a dealership. It's required reading for anyone who's serious about getting into this business.

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