Thinking about becoming a Texas car dealer? Whether you’re looking to start your own dealership or expand into selling used vehicles, there are a few important steps to take before you can legally operate in the Lone Star State. Texas Dealer Education provides all the training and resources you’ll need to meet the requirements for obtaining your license. Here’s a simple guide to help you through the process.
If you’re ready to become a Texas car dealer, you’ll need a General Distinguishing Number (GDN), which allows you to legally buy, sell, and trade vehicles in Texas. The GDN license is essential, particularly for independent motor vehicle dealers, as it provides authorization to sell used cars and other types of vehicles.
At Texas Dealer Education, we’ve helped thousands of entrepreneurs achieve their dream of becoming licensed automobile dealers. Our pre-licensing education course was the first approved by TxDMV, and it’s endorsed by TIADA and reviewed by the Tax Assessor-Collector Association of Texas. We’ll walk you through everything you need to know about the eLICENSING application process and the procedures to becoming a successful Texas dealer.
One of the first major steps toward getting your car dealer license is completing the TxDMV eLICENSING online application. During this process, you’ll also need to take the Texas Dealer Education pre-licensing training course. The course covers everything from compliance with state laws to operating best practices, and it’s mandatory for independent motor vehicle dealers.
When you’re ready to apply for your license, you’ll submit all your documents, including the certificate of completion from our course, via the eLICENSING portal.
Another critical requirement is having a physical dealership location that meets TxDMV’s premises requirements. The state requires you to have a permanent location where you can store and display at least five vehicles. Whether you’re planning to operate from a lot, a showroom, or another type of facility, this location must meet zoning regulations and be approved by the state.
Our pre-licensing course will provide detailed information on the facility requirements and tips for securing the right spot for your dealership.
All Texas car dealers must submit proof of a $50,000 surety bond with their application. This bond acts like a line of credit, costing around two to three hundred dollars a year, much like an insurance premium. It serves to protect your customers from any potential business misconduct.
During the Texas Dealer Education pre-licensing course, we’ll provide guidance on how to secure your surety bond and submit it properly.
Once you’ve completed the pre-licensing course, submitted your application, and identified your location, you’ll need to register your business with the Texas Secretary of State. This is especially important if you’re forming an LLC or corporation. You’ll need your registration documents ready to submit along with your application.
Our course walks you through the business formation process to ensure you’ve checked all the necessary boxes.
What is a Texas dealer license? A Texas auto dealer license legally authorizes you to sell used cars in the state. For independent dealers, this means obtaining a GDN, which allows you to buy, sell, and trade used vehicles.
Do I need a dealer license? Yes, if you’re serious about selling cars for profit. While you can sell up to four vehicles per year without a license, those vehicles must be titled in your name, meaning you’ll pay sales tax. Licensed dealers are exempt from paying sales tax on inventory vehicles, making the license crucial to running a profitable business.
What do I need to get my license? At a minimum, you’ll need:
Can I sell under another dealer’s license instead of getting my own? No. It’s illegal to sell under someone else’s dealer license, and doing so could result in legal actions against you.
Can I just sell cars online without a license? No. Texas law requires you to have a licensed physical location, even if you plan to sell vehicles online.
Who can help with insurance, dealership management software, service contracts, and other needs? While TIADA does not endorse specific providers, members have access to a directory of companies that offer essential services to dealers.
Can I be a TIADA member? Absolutely! You can join TIADA even before you receive your GDN, and once you’re licensed, we’ll update your membership to reflect your new dealer status.
If you have a criminal history and are concerned about your eligibility for a license, you MAY request a criminal history evaluation before applying for a new dealer’s license. This can be done by setting up a user account through the TxDMV website and requesting a criminal history evaluation in the eLICENSING portal. (Note: This step is NOT a requirement but it might be helpful IF you have a criminal history).
By entering this site, you verify you’ve been notified of your rights outlined in the Texas Occupations Code Chapter 53, Subchapter D, as well as the current criminal history guidelines found in the Texas Administrative Code §211.3.