In Texas, anyone who sells or trades more than five vehicles a year needs a dealer license, and applicants usually go through a background check. These are the six steps from forming the business to approval.
At a glance
| Issued by | Texas Department of Motor Vehicles |
|---|---|
| Surety bond | $50,000 (since September 1, 2021) |
| Course | Dealer education from the Texas Independent Automobile Dealers Association |
| Main fees | $350 license fee, $700 General Distinguishing Number fee, $90 per plate |
| Approval time | About 2 to 3 weeks with a complete application |
6 steps to your license
1. Pick the license you need
The most common is the motor vehicle license for buying, selling and trading used cars and trucks. A dealer working in several categories needs a license for each one:
- Motor vehicle: used vehicles
- Motorcycle: used motorcycles and ATVs
- Travel trailer: used travel trailers
- Utility or semi-trailer: new and used utility trailers
- Wholesale: sales to licensed dealers only, no retail
- Wholesale auction: selling vehicles at auction
- Mobility vehicle: vehicles equipped for people with disabilities
- Franchise: new vehicles
2. Form the business and take the course
Form the company first: the certificate of incorporation, organization or partnership approved by the Texas Secretary of State goes with the application. At this stage you also enroll in the dealer education course from the Texas Independent Automobile Dealers Association.
3. Set up a permanent location
- A building, or space inside one, with exterior walls on all sides
- Zoning and DMV premises rules met; the location cannot also be a residence
- A valid mailing address
- An office with at least two chairs and a desk, a working phone listed under the business name, and internet access
- A permanent outdoor sign with letters at least six inches tall
- A lit display area with room for at least five vehicles
- Owned by the dealer or held under a written lease
- Open at least four days a week, four hours in a row, with the hours posted at the main entrance
- Phones answered on weekdays from 9 a.m. to 5 p.m. by staff or an answering service
4. Get the dealer bond
The bond amount rose from $25,000 to $50,000 on September 1, 2021. You pay a premium that is a share of that amount and depends on your credit; with good credit it can be as low as 1 to 3%. Dealers in travel, utility or semi-trailers do not need a bond.
5. Gather the remaining documents
- A copy of your driver's license or other official ID
- A certificate of assumed name, if the business uses one
- A map showing exactly where the dealership is
- An application for eTAGS
- Registration with the Secretary of State or the county
- An employer identification number (EIN)
6. Send the application to the TxDMV
Mail it to P.O. Box 26487, Austin, TX 78755, fax it to (512) 465-5634, or email it to [email protected]. The fees:
- $350 license fee
- $700 General Distinguishing Number license fee
- $90 per dealer plate
If something is missing, you are told and can send it in. Approval takes about two to three weeks with a complete application. A license is valid for two years and must be displayed at the business.
Before you apply
Requirements, fees and bond amounts change. Confirm the current rules with the Texas Department of Motor Vehicles before you file. This guide is general information, not legal advice; for questions about your situation, talk to a lawyer.
Licensed? Stock your lot at the Kendall FL Auto auction
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