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What is a Texas Dealer License?
A Texas Dealer License is a legal authorization issued by the Texas Department of Motor Vehicles (DMV) that allows individuals or businesses to engage in the sale and distribution of motor vehicles, whether new or used, to consumers.
The state issues a license to each dealer, occasionally referring to it as a GDN or General Distinguishing Number. This license bestows upon you the legal authority to operate as a bona fide car dealer within the state. Moreover, it serves as your gateway to obtaining dealer plates
Who Needs a Texas Dealer License?
Anyone involved in selling vehicles in Texas on a regular basis, including individuals and businesses, is typically required to obtain a Texas Dealer License. This applies to:
- New Car Dealers: Those who sell new vehicles.
- Used Car Dealers: Those who sell used vehicles.
- Wholesale Dealers: Those who sell vehicles to other dealers.
- Auto Auctions: Entities that conduct vehicle auctions.
- Retail Auto Finance Dealers: Businesses that provide vehicle financing services.
How to Obtain a Texas Auto Dealer License
Before embarking on your entrepreneurial venture, it’s crucial to be well-prepared by gaining a comprehensive understanding of the steps involved in obtaining a dealer’s license in Texas. Similar to most states like Maryland, you must adhere to the state regulations governing this business, which entails acquiring a Texas auto dealer license and a specific type of surety bond known as an auto dealer bond for dealers.
Although the process can seem intricate, you can simplify it by gathering all the necessary information and learning valuable tips to ensure a smooth and successful beginning to your venture.
which type of dealer license you need
If you plan to engage in the sale or purchase of vehicles in Texas, you’ll need to obtain the appropriate license based on the type of vehicles you intend to deal with. Texas offers various types of licenses to cater to different vehicle categories. To determine the right license for your business, consider the specific type of vehicles you’ll be involved with and select from the following options:
- Motor Vehicle License: This license is for those dealing with used cars, trucks, and similar motor vehicles.
- Motorcycle License: If your focus is on used motorcycles and ATVs, you’ll need this license.
- Travel Trailer License: This license is for those handling used travel trailers.
- Utility or Semi-Trailer License: If you deal with new and used utility or travel trailers, this license is applicable.
- Wholesale License: If you plan to conduct wholesale transactions exclusively to other licensed dealers without retail sales, you can apply for a wholesale license.
- Wholesale Auction License: This license is for those who wish to sell vehicles at auctions.
- Mobility Vehicle License: If your vehicles are equipped to transport disabled individuals, this license is required.
- Franchise License: For dealers dealing exclusively with new cars, a franchise license is necessary.
It’s essential to note that if you intend to work with multiple vehicle categories, you must obtain a separate license for each specific type of vehicle.
Understand which dealer licensing requirements apply to you
Getting a dealer’s license in Texas is done online through the DMV’s eLicensing platform. To increase your chances of approval, it’s crucial to be careful when filling out the application and preparing the necessary documents. Make sure your contact information, like your phone number and address, is accurate so the TxDMV can reach you if necessary.
Here are the typical documents you’ll need to include with your application:
- Proof of a permanent business location that follows local zoning rules, has a permanent business sign, and can hold at least five vehicles of the type you want to sell.
- Certificate of Incorporation, Organization, or Partnerships to show that your business is legally registered.
- If your business is a partnership, corporation, limited liability company, or limited partnership, you’ll need to provide your Employer Identification Number (EIN) from the IRS on your application.
- For most license types, you’ll have to submit a surety bond worth $50,000, covering two years matching your license period.
- Your EIN or social security number.
- Copies of IDs for all owners, officers, or general partners listed in the application.
You can find more details about each requirement in the Dealer Manual mentioned earlier. You’ll also find all the application and document forms you need on the Dealer Forms page.
Remember, you can start your application even if you don’t have all the required items yet and come back to submit them later. Also, don’t forget to mention any other GDN licenses you might have.
Get a Texas auto dealer bond
Obtaining various types of dealer licenses in Texas typically necessitates securing a Texas auto dealer bond worth $50,000, with the exception of franchised dealers, travel trailer dealers, and trailer/semitrailer dealers.
A Texas auto dealer bond is essentially a contractual agreement involving three parties: your business (the principal), the Texas DMV (the obligee), and the surety company that issues the bond.
The primary purpose of the Texas dealer bond is to ensure that your dealership adheres to all its contractual commitments. Essentially, it serves as a safety net for the public, providing assurance that your business will operate within the confines of the law.
Given the importance of this bond, it’s crucial to select your surety bond agency with care. Seek out a reputable agency with a strong track record to ensure that your dealership receives the necessary support.
The optimal approach is to engage agencies that exclusively collaborate with A-rated, T-listed surety companies. This guarantees that your bond is fully backed and that your customers are adequately safeguarded.
Send your completed application and attachments to the Texas DM
You have the option to submit your completed application to the DMV through mail, fax, or email. Here are the details for each method:
Mail:
P.O. Box 26487
Austin, TX 78755
Fax:
(512) 465-5634
Email:
MVD-scancenter@TxDMV.gov
In addition to the application, there are some additional fees to be aware of:
$350 for the license fee
$700 for the General Distinguishing Number License Fee
$90 per dealer license plate
Once you’ve submitted all the required materials, the state of Texas will review your application and either approve or deny it. If any information is missing from your application, you will be notified and given an opportunity to provide the missing documents. On average, the approval process takes approximately 2-3 weeks when all materials are submitted correctly.
