How to Become a Car Dealer in California

In California, there are three ways to buy and sell a car. You can work as a wholesaler, buying cars at auction and selling them to car dealers. You can work as a retailer, buying cars from auctions and dealers and selling them to the general public. You can also work as a broker, facilitating sales between buyers and sellers while taking a cut of the profits. All three activities necessitate a California Department of Motor Vehicles licence.

Method 1 Getting Started

1. Determine whether or not you require a licence. You do not need a licence if you are simply selling your own used car. However, if you plan on buying and selling cars for profit, you must obtain a DMV licence. It is illegal in California to sell cars for profit without a licence. If caught, this activity is known as “curbstoning,” and it can result in hefty fines.

Contact the DMV if you are unsure whether your situation necessitates a licence. In recent years, California has cracked down on curbstoners.

2. Choose whether you want to be a wholesale or retail dealer. The main distinctions are whether or not you will sell cars directly to the public and whether or not you will require retail space. The paperwork for obtaining a wholesale dealer licence or a retail dealer licence is the same.

A wholesale dealer can buy cars from other dealers directly and resell them to other dealers. A wholesaler may also export vehicles to other countries. A wholesale dealer, on the other hand, may not sell directly to the public. A wholesale dealer must have an office but does not need a sign or a place to display vehicles.

A retail dealer can buy cars from other dealers and resell them to other dealers and the general public. A retail dealer may also sell vehicles in other countries. A retail detail requires an office, a sign, and a vehicle display area.

3. Determine whether or not you want to add an auto broker endorsement to your licence. With an auto-broker endorsement, you can act as a go-between for buyers and sellers. An auto-broker endorsement can be added to either a wholesale dealer licence or a retail dealer licence.

As a wholesaler dealer, the only way to sell directly to the public is to have an auto broker endorsement.

There is no additional paperwork required to obtain an auto-broker endorsement. All you have to do is check a box on your licencing application.

Method 2 Completing an Abbreviated Background Check

1. Contact your local Occupational Licensing Inspector. The Inspector can advise you on whether an abbreviated background check is required. To become a car dealer in California, everyone must pass a thorough background check. CA, on the other hand, offers a less expensive abbreviated background check for those who are unsure if they will pass the full background check. If you have any criminal convictions, bankruptcies, or civil judgments against you, you should conduct a quick background check before putting too much money into your business.

The list of Occupational Licensing Inspectors is available at https://www.dmv.ca.gov/portal/dmv/?1dmy&urile=wcm:path:/dmv content en/dmv/fo/inspector office.

2. Completing the Personal History Questionnaire This form requests information about your education and work history. It also asks if you have a criminal record and if you have any civil judgments against you.

Be completely truthful in your responses. CA will conduct an independent background check on you. If you leave out any information, you may be denied a licence.

3. Make copies of any arrest records and court documents that you have. These must be submitted along with the Personal History Questionnaire. If you do not have copies, you can get them from the jurisdiction where you were arrested or appeared in court.

4. Submit the necessary documentation to the Occupational Licensing Inspector. To cover the cost of the abbreviated background check, you must include a check for $176.

5. Wait for the DMV to make a decision. Depending on your background, this could take several weeks. There is no hard and fast rule regarding what can disqualify you from obtaining a licence. The DMV is looking for any evidence of “moral turpitude” in general.

Method 3 Setting Up Your Business

1. Make up a fictitious company name. Unless you intend to conduct business under your own name, you must create and register a business name. To file the paperwork, go to your local County Recorder’s office. The cost is $100.

2. Make an application for a business licence. Go to your town hall and request a meeting with the tax and licence division. Register your business with the city using your own name or the fictitious business name you created.

There are numerous options for registering your company. You can set up an LLC, a corporation, a partnership, or any other type of business entity. It is best to consult with a lawyer before deciding what type of entity you want your company to be.

The cost of your business licence will vary depending on where you live, the type of entity you establish, and your annual revenue.

3. Obtain a surety bond. Locate a bonding company in California and obtain the required $50,000 surety bond.

A surety bond guarantees that you will fulfil your responsibilities as a car dealer.

Surety bonds vary in price depending on your credit, but you can expect to pay between $1,000 and $15,000 per year.

Method 4 Setting Up to Be a Wholesale Dealer

1. Decide whether you want to work from home or somewhere else. A wholesale dealership can be run entirely from the comfort of your own home. If you don’t have room in your home for an office, you’ll need to rent or buy a space.

2. Set up an office. Remember, it’s OK for it to be a home office.

You don’t need a sign or space for a car to be a wholesale dealer.

3. Obtain a duplicate of your lease. If you rent your office space, you’ll need a copy of your lease. A copy of your mortgage is required if you own your office.

Method 5 Setting Up to Be a Retail Dealer

1. Create an office. It’s fine if it’s a home office. However, because being a retail dealer necessitates the use of a retail space, it makes more sense for the office and retail space to be in the same location.

2. Purchase a sign that is at least two square feet in size. Because you will be selling to the general public, the DMV requires you to have a sign advertising yourself as a car dealer.

3. Make sure you have enough room for at least two cars. You’ll need a place to keep the cars if you’re going to sell them directly to the public. The DMV requires that you have enough space for at least two cars, but you can have much more space.

4. Obtain a duplicate of your lease. If you rent your space, you’ll need a copy of your lease. A copy of your mortgage is required if you own your space.

Method 6 Setting Up to Be An Auto Broker

1. Get a wholesale dealer licence or a retail dealer licence. Because an auto broker endorsement is an add-on to your licence, you must first obtain a licence before you can become a broker.

2. Create an office. You can use a home office to add the broker endorsement to your wholesale dealer licence.

3. Purchase a sign that is at least two square feet in size. If you want to add the broker endorsement to your retail dealer licence, you’ll need at least two parking spaces.

Method 7 Getting Your License

1. Finish the CA licencing course. This course is required in order to become a car dealer in California. The six-hour course will teach you about California laws that govern car dealers.

The class is offered by a number of private organisations. Listings can be found on the California DMV website. Depending on which organisation you choose, the cost is around $125.

2. Pass the licencing examination. After completing the course, you will take a test to assess your knowledge of California car dealer law. The examination costs $16.

3. Fill out the “Application for an Original Occupational License.” The application is available in paper form at the DMV or online at https://www.dmv.ca.gov/portal/wcm/connect/2f99916d-285a-441d-b481-e01f7cb88fa5/ol248u.pdf?MOD=AJPERES.  The application will ask if you want to apply for a wholesale or retail dealer licence, as well as whether you want to add an auto-broker endorsement to your licence.

Bring all of your business paperwork, your surety bond, and your financial information with you when you fill out the application.

4. Make copies of your paperwork and mail them to the DMV. You will require duplicates of the following documents: 1) A surety bond; 2) a driver’s licence; 3) a lease or mortgage for your office and retail space; 4) a Dealer Education Certificate of Completion; and 5) a business licence 6) Inventive Name Statement; 7) Photographs of your retail location

To make the final application process go more smoothly, keep copies of everything as you go.

5. Send your completed application, along with copies of your paperwork, to the address below. It is best to send this via certified mail to ensure that everything reaches the DMV.

It will take several weeks for a decision to be made. You can start selling cars once your application is approved.

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