Selling cars is a surprisingly great line of business to be in. If you are currently living in California and have been considering this career path, you aren’t alone. Unfortunately, the path to obtaining a car dealer license in the state isn’t always clear. What kind of licenses do you need? What qualifications are required to obtain a license? More importantly, how can you ensure that you are in compliance? In this post, we will discuss the basics of obtaining a car dealer license in the state of California.
Choose The Right Kind of License
Many potential sellers are surprised to learn just how many different licenses are available. Before you can become a car dealer, you need to determine what kind of dealer you want to be. Getting a simple license does not mean that you can sell any kind of car, so make sure you do your research to determine what licensing option is right for you. Currently, the three most common are licenses for selling new and used cars, licenses for selling only used cars, and licenses to sell cars as a wholesale dealer. Each one comes with its own requirements, so choose wisely. You will be limited by the license that you choose.
Find A Car Dealer Training Session
Before you can obtain a car dealer license, you will need to undergo training. Fortunately, these training courses are generally only one day long, making them easy and affordable. To get started here, seek out car dealer training programs in your area. Make sure you select a training program that matches your license specifically to avoid wasting time and money. Keep your certificate of completion on hand. In most cases, this will be a part of your application down the line.
Select A Compliant Property For Your Business
Before you can sell anything, you will need a physical business location. Since cars can take up quite a bit of space, the state of California will require proof that you have a viable location to sell vehicles from. Before you sign on to purchase a property, make sure that your business ambitions are compliant with local regulations. Some areas do not allow car dealers or will force them to be located in a specific area. Take the time to seek out local requirements for business properties in your area as a start.
Secure A Car Dealer Bond
In the state of California, securing a bond is a requirement to become a licensed car dealer. When applying for a bond, be aware that the bonds that you will qualify for will largely be influenced by your credit, as well as other financial factors. While it is possible to secure a bond with credit that isn’t that great, it can limit your options by quite a bit. This is because the bond is a guarantee for your customers. It is designed to keep them safe from fraudulent activity or purchases by providing a guarantee from a third-party that a car dealer is within compliance and not simply selling lemons to unsuspecting customers.
Since a third-party will be supporting your efforts and ability to provide value to your customers, it should come as no surprise that car dealer bonds cost money. This is where your credit score comes in. If you have poor credit, the third-party is taking a big risk by working with you. In most cases, this means that you will pay more annually for your bond. Poor credit can increase your annual costs by thousands of dollars, but for those with good credit, you might only end up spending a few hundred every year for your car dealer bond.
Get Necessary Licensing
Whether you are selling cars or digital goods, every single state requires that you take the time to get the appropriate licensing. As a bare minimum, you will need to start by obtaining a business license, as well as a valid employer identification number (EIN) with the IRS. This is for your taxes.
In addition to a traditional business license, you will need additional licenses depending on your county. In most cases, your area will require you to obtain a license to sell or resell vehicles depending on your chosen product. Be aware that each license has its own requirements, so read the paperwork thoroughly in order to avoid time spent making corrections, as this will slow your process significantly.
Submit Your Application
After you have taken the necessary steps to ensure that your business is in compliance, you can begin to fill out your application. Again, this is a process that will require you to thoroughly read the paperwork itself. Missing out on a single detail can delay your application process significantly. For this reason, it is crucial to ensure that all of your paperwork is in good order before submitting the application. If you are unclear about something, it is best to contact the department directly.
Work With The Department of Motor Vehicles Directly
The best way to ensure success with your process is simply to work with the DMV instead. Not only does their website offer a collection of helpful resources on compliance, but they also offer the necessary paperwork. Contacting the DMV with any questions can help you to ensure that your paperwork is in good order the first time so that you can become a licensed car dealer as soon as possible. When in doubt, a simple call can go a long way.
Becoming a licensed car dealer in the state of California is not the fastest process and it does require a fair share of paperwork. However, it is well worth the time and money when it comes down to it. As soon as your application is approved, you can begin to find great deals on vehicles and work to start selling them professionally. Remember, local regulations can play a significant role in what is required to obtain and maintain your license, so check out local guidelines for the best results. Otherwise, enjoy your time as a brand new car dealer!