Generally, anyone engaging in the business of buying, selling, or exchanging motor vehicles of any kind in the state of Texas must get a Texas Dealer License.
You are able to sell up to 5 vehicles a year as long as those vehicles are titled in your name and used primarily for personal, family, or household use. If you wish to flip cars for a profit, you will need a Texas Dealer License.
Not sure if you need a license? Check out this post on selling cars without a license.
How to get a Texas Dealer License
Starting March 2017, the Texas DMV replaced its paper-based licensing system with eLICENSING.
You can now apply, renew, or amend your motor vehicle dealer license online.
To receive email updates regarding eLICENSING, visit www.TxDMV.gov/subscribe and check the box beside the Dealers and Manufacturers subscription topic.
Step #1: Obtain a General Distinguishing Number (GDN)
A GDN is required to maintain a permanent place of business and allows you to buy, sell, or exchange the type of vehicle for which the GDN is issued.
You might need to get more than one GDN.
Questions arise as to when a dealer needs an additional GDN. The following are some examples that a dealer would need to obtain more than one license/GDN:
- Franchised dealers need a franchise license in addition to the GDN.
- Franchised dealers must obtain a separate franchise license for each location that new motor vehicle sales are made.
- Dealers who own dealerships in different cities.
- Franchised or independent dealers who wish to sell different types of vehicles (i.e. a motorcycle dealer who wishes to sell trailers as well).
Step #2: Complete a Texas Auto Dealer Application
Before completing your Texas Auto Dealer License Application, take a look at the Dealer Manual to ensure you are applying for the appropriate TX Auto Dealer License.
Step #3: Purchase $50,000 Texas Auto Dealer Bond
As of 2017, franchise dealers and trailer dealers are the only license types NOT required to get bonded.
All other dealers are required to get bonded.
Not sure how to get a Texas Auto Dealer Bond? Use this interactive tool to help you out.
More About the Texas Auto Dealer Bond
A TX Auto Dealer Bond is a type of surety bond that protects your customers from fraud or misrepresentation during a business sale. It is a requirement to get your Texas Auto Dealer License.
The bond amount is set at $50,000.
You won’t have to pay the full bond amount to get bonded. You will just pay a small one-time fee that is based largely on your personal credit score. Rough estimates are below:
- Exceptional credit score rate: $250
- Bad credit score rate: $1,000 – $3,750
Once you purchase your Texas Auto Dealer Bond, the surety company will mail it to you.
Step #4: Submit Texas Dealer Application
Submit your paperwork and original bond to the Texas DMV. All of this can be done through the TxDMV eLICENSING portal. You can also submit your license fee online through the portal.
You will be able to track the progress of your application after you submit.
Upon approval, you will be issued your Texas Dealer License.
For more information, view the eLICENSING User Guide for Independent GDN Licenses.
License Expiration and Renewal
All Texas Dealer Licenses are valid for two years from the date they are issued.
License renewals can be completed online through the TxDMV eLICENSING portal.
For more information on how to be a successful licensed dealer, view our free ebook: