Your Guide to Getting a Texas Dealer License

• What is a Texas Dealer License?
• Who Needs a Texas Auto Dealer License?
• How do I Get a Texas Dealer License?
• How Much Does It Cost to Get a Texas Dealer License?
• How Long Does It Take to Get a Texas Dealer License?
• How to Renew Your License
• How to Get a Dealer’s License Without a Lot

What is a Texas Dealer License?

A Texas Dealer License is a state-issued authorization that allows individuals or businesses to legally buy, sell, or exchange motor vehicles in Texas. The Texas Department of Motor Vehicles (TxDMV) oversees the licensing process to ensure dealers operate within state regulations.

Who Needs a Texas Auto Dealer License?

If you plan to buy, sell, or trade motor vehicles for profit in Texas, you'll need a Texas Auto Dealer License. Whether you're running a dealership, selling at auctions, or operating online, the state requires proper licensing to ensure fair business practices and consumer protection. There are a few exceptions, but most vehicle sales beyond personal use fall under this requirement.

Who Definitely Needs a License?

• Independent Dealers: Selling used vehicles to the public.
• Franchise Dealers: Selling new vehicles under a manufacturer agreement.
• Wholesale Dealers: Selling vehicles to other dealers, not the public.
• Motorcycle and ATV Dealers: Selling two- or four-wheeled recreational vehicles.
• Trailer or Semi-Trailer Dealers: Selling trailers weighing over 4,000 lbs.

Who Doesn’t Need a License?

• Selling your own personal vehicle (up to 4 per year).
• Buying or selling non-motorized trailers under 4,000 lbs.
• Auto auctions selling vehicles only to licensed dealers.

If you’re planning to sell vehicles regularly, even online, you’ll need a license to stay compliant and avoid penalties.

How do I Get a Texas Dealer License?

Obtaining a Texas Dealer License requires following a few essential steps to ensure compliance with state regulations. There are several different license types that you can apply for, and the specific licensing requirements will depend on the area your business plans to operate in. Below you can find the main steps to follow to get your license.

1. Pick your Texas Dealer License Type

Your first step is to select the type of Texas auto dealer license that you need. Most dealers apply for a GDN (General Distinguishing Number) license, commonly known as an independent license. This is the primary license required for anyone wanting to sell used motor vehicles in Texas. Issued by the Texas Department of Motor Vehicles (TxDMV), it allows individuals or businesses to legally buy, sell, or exchange vehicles.

Licenses available under the independent license category include:

• Independent Motor Vehicle  – can sell, buy or exchange used cars, trucks, motor homes, and neighborhood vehicles
• Independent Motorcycle Dealer  – can sell, buy or exchange used motorcycles, scooters, and ATVs
• Travel Trailer  – can sell, buy or exchange used trailers
• Trailer/Semitrailer  – new or used utility trailers and/or semitrailers
• Wholesale Dealers  – can sell or exchange vehicles only with other licensed dealers
• Independent Mobility Motor Vehicle Dealer – can sell new mobility vehicles

Important: A GDN license does not allow you to sell new vehicles unless they fall under the independent mobility category. To sell new cars or trucks, you must apply for a Franchise Dealer License. 

For example, if you wish to sell new cars, you'll first need an Independent Motor Vehicle Dealer license, followed by the Franchise Dealer License.

2. Register your Business and Complete Pre-Licensing Education Course

To get started, establish your business by registering with the Texas Secretary of State and obtain a Texas Sales Tax Permit from the Comptroller of Public Accounts. Once your business is established, apply for your dealer license through the TxDMV eLICENSING system.

New applicants and those licensed for less than 10 years must also complete a one-time, TxDMV-approved pre-licensing education course. This course covers dealer laws, board rules, and potential penalties for non-compliance. After completing the course, you’ll receive a certificate of completion, which must be uploaded with your eLICENSING application

New webDEALER Requirement (Effective July 1, 2025):

Starting July 1, 2025, all licensed dealers in Texas must use the TxDMV webDEALER system to electronically process title and registration for vehicle sales. Dealers without webDEALER accounts will not be able to complete sales transactions after this date.

3. Establish Your Business Location

To qualify for a Texas dealer license, you must establish a business location that meets state and local requirements. The specifics vary depending on whether you're applying for a retail or wholesale license.

Retail Dealer Location Requirements

• Office Space: You need a permanent office with internet access, electricity, and storage for business records.
• Display Area: A dedicated space for displaying motor vehicles, large enough to accommodate your inventory.
• Signage: A business sign with your dealership name, visible from the nearest public road.
• Zoning Compliance: The location must comply with local zoning laws for commercial use.

Wholesale Dealer Location Requirements

If you’re applying for a wholesale license, the requirements are slightly different:

• Office Space: You must maintain an office with internet access and secure storage for records.
• Display Area: A lot is not required, as wholesale dealers only sell to other licensed dealers, not the public.
• Signage: A visible business sign with the dealership name matching your application.
• Zoning Compliance: Your location must still meet local zoning regulations for commercial activity.

Whether retail or wholesale, meeting these location standards is crucial for your license approval. For more information, consult the Dealership Premises Checklist.

4. Obtain а Texas Auto Dealer Bond

Obtaining a Texas auto dealer bond is a crucial step in the licensing process. This surety bond serves as a financial guarantee, protecting consumers and ensuring dealers comply with state regulations. Most dealer types in Texas must secure this bond, except for franchise dealers and independent dealers selling only travel trailers or semitrailers.

The required bond amount is $50,000, but you only need to pay a small percentage of this as your bond premium. The premium typically ranges from 1% to 3%, depending on your personal and business financial health, including your credit score. Stronger finances result in lower rates, making it more affordable to meet this licensing requirement.

5. Organize Necessary Documents

To complete your Texas dealer license application, you'll need to provide several supporting documents:

• Business Formation Documents: Certificate of Formation or Assumed Name Certificate from the Texas Secretary of State.
• Proof of Ownership or Lease: Deed, lease agreement, or property tax statement for your business location.
• Sales Tax Permit: Issued by the Texas Comptroller of Public Accounts.
• Driver's License: Copy of the owner’s or principal’s valid driver’s license.
• Fingerprint Receipt: Proof of completed fingerprinting for background checks.
• Pre-Licensing Education Certificate: Required for independent motor vehicle GDN applicants.
• Insurance Proof: For retail dealers only.

6. Submit Your Application

After gathering all required documents, submit your Texas dealer license application through the TxDMV eLICENSING system. Be sure to pay the applicable fees and choose one of the following submission methods:

Mail:
P.O. Box 26487
Austin, TX 78755

Fax:
(512) 465-5634

Email:
[email protected]

Each license is valid for two years from the first day of its issuance month and must be prominently displayed at your business location.

How Much Does It Cost to Get a Texas Dealer License?

The cost of a Texas dealer license varies depending on the type of license you apply for. Here’s a breakdown of the key expenses:

• GDN License Fee: $700 for a two-year license. This applies to most independent dealer categories, such as used car, motorcycle, or trailer dealers.
• Franchise Dealer License Fee: $350 per location, also valid for two years.
• Dealer Surety Bond: A $50,000 bond is required for GDN license holders, with annual premiums typically ranging from $250 to $1,000, depending on credit.
• Business Location Costs: You’ll need an established business location that meets TxDMV requirements, which can vary depending on rent, utilities, and signage.
• Application and Fingerprinting Fees: Expect to pay around $38.25 per applicant for fingerprinting as part of the background check process.
• Dealer plates: $90 per plate, with a minimum of two plates usually required.

Additional costs might include insurance, signage, and operational expenses. It’s wise to budget for at least $1,000 to $2,500 upfront, depending on your dealership size and business structure.

How Long Does It Take to Get a Texas Dealer License?

The TxDMV will review your application, conduct a background check, and verify your business location. If everything is in order, you'll receive your license, typically within a few weeks to a few months.To avoid delays, carefully review your documents before submission. If the application is incomplete or if issues arise, the TxDMV will contact you for corrections.

After approval, you can legally begin buying, selling, or exchanging vehicles under your new Texas dealer license.

How to Renew Your License

To continue operating as a licensed dealer in Texas, you must renew your license every two years. The renewal process ensures that your business remains compliant with state regulations. You can submit your renewal application up to 180 days before your license expires, and it's highly recommended to apply early, as the TxDMV has implemented new processes that may extend application processing times.

To renew your license, log in to the TxDMV eLICENSING portal to begin the renewal process. Ensure all information is current, including your business location, insurance, and any updated records. Once you’ve submitted the required documents and paid the renewal fees, the TxDMV will review your application.

Do you need further details about the Texas car dealer license and bonding requirements?

You can reach our bonding experts by calling us at  877.514.5146.

How to Get a Dealer’s License Without a Lot

In Texas, you can get a dealer's license without a lot by applying for a Wholesale Motor Vehicle Dealer License, which allows you to sell vehicles only to other licensed dealers or through auctions, never directly to retail customers. 

While you don’t need a display lot, you must have an office in a building that meets local zoning requirements, including a desk, two chairs, internet access, a business phone, and a sign with your dealership name in letters at least six inches tall. 

Wholesale dealers can’t sell to the general public, making them reliant on relationships with franchise dealerships to purchase trade-ins or selling auction vehicles to other dealers.