How to sell used cars in California
November 30th, 2022 by admin
If you're interested in selling cars in California, you'll need to obtain a car dealer license from the Department of Motor Vehicles (DMV). While having a car lot is one way to meet the DMV's requirements, it's not the only way. In fact, you can get a car dealer license in California without a car lot. Here's how:
1. Determine the type of dealer license you need:
The DMV issues several types of dealer licenses in California, used car dealers, and wholesale-only dealers. Each license has different requirements and fees, so it's important to determine which type of license you need before you begin the application process. Here’s how you determine which license is going to be right for you:
- Retail used car dealer – A retail dealer license is the most popular license because it allows you to sell vehicles to the public. The bare minimum requirements for a retail license is having a commercial office with two parking spots. This, however, can be something as minimal as an executive suite with two parking spots. There are some locations in California with DMV approval where you can have just one parking spot. This can help minimize the costs of startup
- Wholesale car dealer – If your insistent on no commercial location whatsoever and doing it out
of your own private residence, then getting your wholesale dealer license is the way to go. Keep
in mind that having your wholesale dealer license only allows you to sell to other licensed
dealers and you are strictly prohibited from selling to the public.
- In order to operate out of your home, your wholesale dealer license will have to be based in an area of your residential property that has a direct entry point from the outside
2. Complete a pre-licensing education course
Before you can apply for a car dealer license in California, you must complete a pre-licensing education course that covers the basics of the car dealer business, including dealer obligations and regulations. There are several approved providers of pre-licensing education courses in California, and you can choose one that works best for you.
3. Obtain a dealer bond
All car dealers in California must obtain a dealer bond, which is a type of insurance that protects customers from financial loss if the dealer fails to meet their obligations. The amount of the bond required depends on the type of dealer license you're applying for, but it's typically between $10,000 and $50,000.
4. Obtain a business location
While you don't need a car lot to get a car dealer license in California, you do need a physical location for your business. This can be a commercial office space or a home office, as long as it meets certain requirements set by the DMV. Your location will need to be inspected by the DMV before you can be approved for a dealer license.
5. Obtain insurance
All car dealers in California are required to have liability insurance, which covers damages or injuries caused by vehicles sold by the dealer. The amount of insurance required depends on the type of dealer license you're applying for, but it's typically between $100,000 and $250,000.
6. Complete the application process
Once you've completed the pre-licensing education course, obtained a dealer bond, obtained a business location, and obtained insurance, you're ready to apply for your car dealer license. You can apply online through the DMV's website, or you can submit a paper application by mail.
7. Pay the fees
There are several fees associated with getting a car dealer license in California, including an application fee, a license fee, and a registration fee. The amount of the fees depends on the type of dealer license you're applying for, but it's typically between $175 and $1,000.
In conclusion, while having a car lot is one way to meet the DMV's requirements for a car dealer license in California, it's not the only way. By following these steps, you can obtain a car dealer license without a car lot and start selling cars legally in California.
Posted in: Education