How to Get a California Auto Dealer License: A Step-by-Step Guide + Typical Costs

How to Get a California Auto Dealer License: A Step-by-Step Guide + Typical Costs

California Vehicle Code §11700 requires auto dealers to obtain a license as a prerequisite to buying, listing and selling vehicles. This article provides a step by step guide on the licensing process, breaks down the associated costs and explains how your dealership can purchase and maintain the required auto dealer surety bond.

Step 1: Confirm your dealer type

California has unique license classifications based on the type of vehicles a dealership sells and the services being offered. Below is a full list of all California Auto Dealer license classifications:

• New Vehicle Dealer - Sells new vehicles, typically requiring a manufacturer franchise agreement
• Used Vehicle Dealer - Sells used vehicles to the public
• Wholesale Vehicle Dealer - Sells exclusively to other licensed dealers 

Step 2: Establish a place of business

California requires new and used dealers to obtain a physical location used to conduct business. The location must satisfy the following requirements:

• New Vehicle Dealer - photos of office, sign, display area, + location.
• Used Vehicle Dealer - photos of office, sign, display area, + location.
• Wholesale Vehicle Dealer - photos of office + location. (Unlike retail dealers, wholesale-only dealers generally aren’t required to have a vehicle display area or exterior signage, and their photo requirements are typically limited to the office and location.)

DMV’s photography requirements also include sign standards such as:

• The sign name must match your application name.
• The sign must be permanently affixed to the exterior and visible from 50 feet (with some alternative photo options in certain building setups).

Step 3: Create a Business Entity

The DMV notes that you will need a  Statement of Information filing (if your business is a corporation, LLC, or LLP). If you have not filed your business with the Secretary of State yet, follow the steps below.

• Search your business name in SOS’s bizfile business search to make sure it’s available.
• Create an account and start your filing on bizfile Online (SOS’s official filing portal).
• File your formation documents (LLC Formation or Corp Formation) through SOS’s “File Online” workflow.
• File your Statement of Information after formation (LLCs typically file an initial statement shortly after registering, then on a recurring schedule). These can also be filed online through bizfile Online.
• Save your stamped filings + SOS entity number - you’ll want them handy for your DMV dealer application.

Step 4: Complete a Dealer Education Course

If you’re applying as a used dealer or wholesale-only dealer, DMV requires you to pass a written examination administered by DMV before submitting your application materials and attend a dealer education program. You can find a list of approved providers here.

Step 5: Purchase a Surety Bond

California requires auto dealers to purchase and maintain a surety bond. The bond requirements are outlined below:

Most California dealers must file a dealer surety bond as part of the licensing process.

• $50,000 bond for retail dealers.
• $10,000 bond for wholesale-only dealers, or retail dealers that exclusively sell motorcycles and/or ATVs.

How much will the bond cost (premium)?

The $50,000 dealer bond can cost roughly $400 to $4,500 per year, and the $10,000 dealer bond can cost roughly $1000 to $1,500 per year ( both of these bonds are priced largely on credit and underwriting factors). Here at Jet, we make it our mission to get you the lowest rate available to you, to find out what rate you qualify for, apply here. 

*Important distinction: the bond amount ($50,000 / $10,000) is the coverage required by the state; the premium is what you pay to keep the bond active.

Step 6: Get Fingerprinted

DMV requires Live Scan fingerprints for each person listed under ownership. Out-of-state applicants may use fingerprint cards and pay the associated fee. You can get this done here.

Step 7: Complete the application and pay the required fees

Auto dealers can submit their license applications online here. The following must be included with the application:

• List documents that must be included with the application
• Application for Original Occupational License, Part C (OL 12)
• Original Application for Occupational License (OL 21A)
• Dealer surety bond form (OL 25 or OL 25B)
• Authorization to Release Financial Information (OL 53)
• Application for Occupational License Personal History Questionnaire (OL 29B)
• Appointment of Director as Agent for Service of Process (ADM 9050)
• Request for Live Scan Service [copy] (DMV 8016)

Step 8: Pass Inspection

After DMV processes your application, DMV says you’ll receive an email instructing you to schedule an inspection of your business location. Once you get that email:

• Create (or sign into) your MyDMV account (use the same email tied to your application).
• Go to DMV’s Occupational Licensing online services and follow the email instructions.
• Select an available time slot for the inspection. 

DMV states the OL inspector will:

• Inspect your main business office where you conduct business. DMV notes the office must not be temporary/transitory/mobile and must be a place “actually occupied” continuously or at regular periods.
• Inspect your books and records pertinent to the business.
• Inspect your display area (not required if you’re wholesale-only) to confirm it can physically accommodate the type of vehicles you’re licensed to sell and is for your exclusive display use.
• Inspect your signage (not required if you’re wholesale-only) to confirm it meets DMV’s permanence/readability requirements. DMV also notes a temporary sign may be acceptable if a permanent sign is on order and you provide evidence of the order.

How do California Auto Dealers Renew Their License?

California DMV lets dealers renew online through the Occupational Licensing portal. Log in with your MyDMV account, go to My Licenses, and follow the renewal steps for your dealer license.

When you renew, DMV says you must submit:

• Proof of continuing education (required every two years)
• Renewal Application (OL 45)
• $50,000 Bond Exemption Application (OL 56) (wholesale-only dealers, if applicable)
• OL 247 (plates form) (required if you are not renewing all plates)
• Continuing Education Exemption Application (OL 257) (wholesale-only dealers, if applicable)

DMV also notes you’ll mail your application and fees to the address on OL 45 (even though renewal is available online, DMV still references OL 45 for mailing instructions).

Why Should California Dealers Get Bonded With Jet Surety?
The dealer bond is one of the most time-sensitive items in your application packet, and it’s also one of the easiest to knock out early so you’re not scrambling when you’re ready to submit. If you know your dealer type (retail vs. wholesale-only/motorcycle/ATV-only), you’re already 90% of the way to getting the correct bond requirement handled. Jet offers some of the lowest rates in the industry for this bond, to see what you qualify for, apply here.