If you want to buy and sell cars as your occupation in California, you need to obtain a dealer’s license. A dealer’s license gives your the right to operate a business as a car dealer, though several criteria must be met and an application submitted fully. You must:
- Attend a dealer training education course
- Fill out several forms
- Have legal status of your property to operate as a dealer
- Pay your application and annual fees
- Provide a surety bond
- Undergo a background investigation
Your application, once everything has been submitted, will be reviewed by DMV inspectors and a temporary license can be issued, pending inspection. You should be approved or denied within 120 days of your completed application.
Part 1 of 4: Attend a dealer training class
Step 1: Find a dealer training program. Find a dealer training program operating close to you.
- You can find DMV Dealer Education Provider who can provide the dealer training course you need specifically.
Step 2: Complete the dealer training program. Once you complete the dealer training program, you must be prepared to successfully pass a test on the course information with your DMV inspector. You must get 28 correct out of 40 multiple choice questions on the dealer test.
Step 3: Get your certificate. Obtain the Dealer Education Certificate of Completion from the course provider. Your certificate is required to be less than one year old to take the DMV test.
- Once stamped by the DMV Inspector it will need to be submitted with your application for a dealer license. It is only valid for one year from the dealer training date.
Part 2 of 4: Obtain a surety bond
For used car dealers, you’ll need to secure a surety bond of $50,000 prior to being issued a dealer license. This essentially provides a security to the state that your business will be operated in an ethical and legal manner. Wholesale dealers with sales of 24 cars per year or less may operate on a $ 10,000 bond.
Step 1: Acquire a bond. Obtain a bond from your car dealer bond company in the amount of $50,000.
Step 2: Complete the form OL25. The bond company will fill out form OL25 completely and it must be submitted along with your dealer license application.
Step 3: Paying the surety bond. You can also pay the surety bond as a cash deposit to the DMV but DMV will hold your cash three years after you close your dealership. If you have good credit it is best to use a bond company.
Part 3 of 4: Obtain your used car dealer application checklist
Step 1: Use the online application checklist. Use dealer application checklist on the State of California DMV website.
- Your application will be rejected or delayed if you are missing information.
- The checklist must be submitted along with your application, and all the following forms in order.
Step 2: Submit the form OL12. Supply a completed Application for Original Occupational License, form OL12.
Step 3: Complete the form OL21A. Submit a completed Original Application for Occupational License, form OL21A.
- Both occupational license forms are required and must be completed and submitted.
Step 4: File the form OL25. File your surety bond form, OL25.
Step 5: Submit the form OL53. Complete form OL53, Authorization to Release Financial Information.
Step 6: Supply the form OL 902. Submit the Property Use Verification for Vehicle Dealers License, OL 902.
- This form must be completed and signed by an official for your local zoning department. Shared use is allowed in some instances as long as their is a separation of the businesses. Sometimes a conditional use permit is required. Never can two dealers occupy the same space.
Step 7: Complete and attach form OL29B. The Application for Occupational License Personal History Questionnaire.
- It must be completed by every person listed as part of the ownership on form OL12. All owners with a 10% ownership interest must attend the dealer training course.
Step 8: Attach your personal information. Attach a photocopy of your driver’s license or identification card and your social security card. A federal tax id number is required of all foreign dealership owners.
Step 9: Complete the form ADM9050. The Appointment of Director as Agent for Service of Process for each listed owner on form OL12. This form can be signed in the presence of the DMV Inspector or it must be notarized.
Step 10: Submit the form DMV 8016. Complete a Request for Live Scan Service, form DMV 8016, for each person required to complete the personal history questionnaire. The background check can take 30-45 days to be completed.
- This is a fingerprint card scan that is kept on record.
Step 11: Attach supporting documents in the following order:
- Your Dealer Education Certificate of Completion that was issued when you finished your dealer training course
- Articles of Incorporation if you are starting your used car dealership as a corporation. You can be sole proprietor, partnership, corporation or LLC.
- A copy of your Fictitious Name Statement for each name being used. This is commonly called the DBA statement and is required to open the required checking account in the name of the dealership.
- A signed copy of your rental or lease agreement for your property, along with proof of ownership from the property owner. A sublet must be verified with the property owner.
- A photocopy of your business license
- A copy of your State Board of Equalization Resale Permit
- Photos of your business location, sign, car lot, and building. 11 photos are required for your retail car dealer application.
Step 12: Check all of your paperwork. Double check that your paperwork is all present, your checklist is completed, and make a copy of all the forms and documents for your records.
Part 4 of 4: Submit your used car dealer application
Step 1: Locate your local Occupational Licensing DMV Inspector Office.
Step 2: Turn in your paperwork. After you take and pass the dealer test you may submit all of your paperwork to the DMV OL Inspector.
Step 3: Pay the necessary fees. There is a $175 non-refundable application fee.
- In addition, you are required to pay a $1 Family Program Support Fee.
- Pay $71 plus applicable county fees for each dealer plate you wish to obtain. Dealer plates with insurance are a critical component of your dealership.
- If you have more than one location, pay $70 for each additional branch location.
Step 4: Stand by for your approval. Your DMV Inspector will then make an appointment to visit your dealer location. A temporary license can be issued prior to site inspection. It can take up to 120 days for an application to be approved.
- A background check will be performed as well.
- If you have a criminal record or have a past that may indicate you won’t conduct business in an ethical manner, your application may be rejected. Certified court copies of any arrest and conviction in the past 10 years is required. Disclosure of any DMV administrative action is also required.