How to Get a California Motor Vehicle Dealer License
Getting a California Motor Vehicle Dealer License can seem like a difficult task, but this post should help those interested navigate the process. This post will break down the licensing process into five steps to make the application process more manageable and help applicants prepare for it properly.
Do you want to open a dealership with a franchise like Toyota? Volkswagen? Nissan? Or would you rather open your own independent used car dealership? The answers to these questions will help you determine the kind of license you should pursue. The kinds of licenses you can pursue in the state of California are the New or Used Auto-Commercial, Commercial Used Auto, Wholesale Dealer Only and Auto-broker.
New or Used Auto-Commercial dealers are dealers who sell the cars of a specific franchise. For ex ample, if you want to open a dealership with Toyota, this is the kind of license you would need. New or Used Auto-Commercial dealers follow the company policy of whatever franchise they are associated with and they act on behalf of that company to sell cars. They can sell both new and used cars and buy cars from both the public and other licensed motor vehicle dealers.
Meanwhile, Commercial Used Auto licensees are only permitted to sell used cars and trucks. They can sell these used cars and trucks to the public, or other licensed dealers. Commercial Used Auto licensees are independent of a larger franchise, company and manufacturer, unlike the New or Used Auto-Commercial licensee.
Wholesale Dealers only sell vehicles to other licensed motor vehicle dealers. There is a limit to the amount of cars they can sell to the public, and if that limit is exceed, they must apply for a new license.
Auto-brokers are people that professionally help people buy cars or other motor vehicles. Auto-brokers are not affiliated with any larger franchise or car manufacturer. You can click here to view a checklist for the application if you would like some more information.
Get a California Motor Vehicle Dealer Surety Bond
The California Motor Vehicle Dealer Surety Bond is one of the most important steps in the motor vehicle dealer licensing process. A California Motor Vehicle Dealer License cannot be granted if the applicant does not have this bond on file with the state. The State of California requires motor vehicle dealers to post this bond to ensure you, as the dealer, do not cause harm to the state or the public. This bond must be kept valid and be renewed timely, if not there could be problems with your license. The California Motor Vehicle Dealer Bond will be in the amount of $10,000 or $50,000. The bond amount will depend on which license you are seeking.
Submit to a Background Check
Motor vehicle dealer license applicants are required to get a background check before they can be licensed. It looks for prior convictions of a crime or crimes and to examine whether or not the applicant will run an ethical business. All prior convictions must be disclosed, but having a prior criminal record is not grounds for automatic disqualification for the license. The background check is a way to double check to ensure they only grant licenses to people who will run good and safe business.
Get the Necessary Forms and Fees
The California Motor Vehicle Dealer License requires a fair amount of forms, fees and permits during the application process. The California Department of Motor Vehicles has helpfully complied a document that contains the required forms for licensing. That document can be found if you click here. There are also fees that accompany the application. The fee schedule is as follows:
- $175.00 – non refundable fee for submitting the application
- $100.00 – if you are applying as an autobroker, this fee is an additional application fee you have to pay on top of the $175 application fee
- $ 70.00 – is required for each additional branch the dealer wants to open.
- $300.00 – is the New Motor Vehicle Board Fee and it is required for new commercial auto dealers and motorcycle dealers, motor home, and trailer dealers in each location
- $ 70.00 – for each dealer plate. This fee is optional, and it can be more than $70 if there are additional fees imposed by the county
- $ 72.00 – for each motorcycle plate. This fee is also optional and it could also be more with additional fees imposed by the county
This list covers most of the costs for being licensed. In term of permits, licensee are required to get the following two permits/licenses: 1.) a Resale Permit executed by the California Board of Equalization and 2.) all of the proper city and county business licenses. The application also requires copies of your fictitious name statement, lease agreement, and photographs of the business location. More details about the required permits and forms can be found if you click here.
Submit the License Application
Once you have completed all these steps, you are ready to submit your application. Once submitted, the Department of Motor Vehicles gives you access to information that will allow you to check the status of your license. This will tell you where it is at in the process of being reviewed. Beware, it may take up to 120 days to fully process the application and finish the necessary background checks. However, if all forms are filled out fully and correctly, it will likely take less time! As soon as you get word from the DMV that your application is approved, you’re ready to open doors as an official California Motor Vehicle Dealer!