How to Get a Dealer License in Texas

In Texas, anyone who buys and sells 5 or more vehicles per year must hold a General Distinguishing Number (GDN) license issued by the Texas Department of Motor Vehicles (TxDMV). A GDN is the official Texas dealer license. It authorizes you to legally buy, sell, or exchange vehicles and unlocks access to dealer-only auctions.

This guide covers the requirements, costs, and step-by-step process for getting a GDN license in Texas, with a focus on the two most common paths: the independent motor vehicle dealer license (retail) and the wholesale dealer license. The process for other GDN types follows the same structure with specific differences noted where they apply.

Who Needs a Texas Dealer License?

Under Texas Transportation Code Section 503.024, you need a dealer license if you:

• Sell 5 or more vehicles per year that are titled and registered in your own name
• Sell even one vehicle that is not titled and registered in your name

You do NOT need a dealer license if you:

• Sell 4 or fewer vehicles per year that are titled in your name
• Sell a personal or business vehicle that was not acquired for resale
• Sell vehicles as a government agency
• Sell a vehicle through a court-ordered sale (repossession, probate, etc.)
• You are an insurance company selling a vehicle acquired through a claim
• Sell antique vehicles (25+ years old) or special interest vehicles (typically 12+ years old and preserved as collectibles) under the applicable statutory exemptions

What Is a GDN License?

A General Distinguishing Number (GDN) is the license issued by TxDMV to authorize you to operate as a vehicle dealer in Texas. GDN licenses are issued by vehicle type. If you plan to sell both used cars and motorcycles, for example, you need a separate GDN for each category. Each GDN also requires its own separate surety bond.

Types of Texas Dealer Licenses

TxDMV offers several GDN license types based on what you plan to sell. Select the category that matches your business. If you plan to deal in more than one vehicle type, you need a separate application and a separate bond for each.

Converter, distributor, manufacturer, in-transit operator, and leasing licensor/facilitator licenses are separate categories not covered in detail in this guide. See the TxDMV licensing page for details on those license types.

Texas Dealer License Requirements

The requirements below apply to all independent GDN license types. Where a requirement applies differently by license type, this is noted. If you are applying for a franchised dealer license, review the TxDMV licensing page for requirements specific to that license.

Eligibility (all GDN types)

• Be at least 18 years old
• Have a registered business entity (LLC, corporation, partnership, or DBA for sole proprietors)
• Provide a Texas Secretary of State certificate of filing if the business is an LLC, corporation, or limited partnership (not required for sole proprietors or general partnerships)
• Provide government-issued photo ID for each owner, officer, or general partner
• Disclose criminal history for all owners, officers, and general partners as part of the application. TxDMV evaluates the nature and recency of offenses on a case-by-case basis. A prior criminal record does not automatically disqualify you.
• Complete fingerprinting if applying for a salvage vehicle dealer or in-transit drive-a-way operator license (required by TxDMV rule effective June 1, 2024; does not apply to standard GDN types)

If you have a criminal history, you can request a Criminal History Evaluation Letter from TxDMV before submitting a full application. This gives you a preliminary assessment of whether your record would be disqualifying, so you can avoid spending time and money on an application that is unlikely to be approved. Requests are submitted through the TxDMV eLicensing system. The fee is $100 and a response is typically issued within 90 days.

Office requirements (all GDN types)

• Located in a permanent building, not a residence, apartment, hotel, motel, restaurant, or gas station
• At least 100 square feet of interior floor space, minimum 7-foot ceiling
• A closeable door that allows private customer meetings while seated
• Desk, two chairs, working internet access, and a working business phone with a published listing
• Secure, locked storage (locked room, closet, or bolted steel cabinet) for all dealer plates
• Valid lease covering the full 2-year license term, or proof of property ownership
• Local zoning compliance: the location must be in an area zoned for motor vehicle sales. Verify this with your municipality before signing a lease.
• Business hours posted at the main entrance:
  • Retail dealers: open at least 4 days per week, at least 4 consecutive hours each day
  • Wholesale dealers: open at least 2 weekdays per week, at least 2 consecutive hours each day
• Permanently mounted exterior sign: letters at least 6 inches high, visible within 100 feet of the main entrance, made of durable weather-resistant material (no banners)
• Photos of your office interior and your exterior sign are required as part of your application upload in eLicensing

Display lot (retail/independent motor vehicle dealers only)

• A designated space large enough to display at least 5 vehicles of the type you are licensed to sell
• Reserved exclusively for inventory; cannot be used for customer parking, employee parking, or general storage
• Wholesale dealers are exempt from the display lot requirement

Bond and dealer education

• $50,000 surety bond: required for most GDN license types before your license is issued. Travel trailer, utility trailer/semitrailer, and franchised dealer (new vehicle sales) licenses are exempt. A separate bond is required for each GDN category. See Step 5 for full details.
• Dealer education certificate: required for independent motor vehicle GDN applicants only, before submitting the application. See Step 4 for details.

Can You Get a Texas Dealer License Without a Lot?

Yes. A wholesale GDN license does not require a display lot. It is the most direct path for anyone who wants to buy and sell vehicles without a retail setup. What a wholesale license allows:

• Buy and sell vehicles to other licensed dealers only, not to the general public
• Use dealer plates and temporary buyer tags
• Access dealer-only auctions (Manheim, ADESA, Copart, and others). A valid GDN is what grants auction entry. Attending a dealer auction requires any valid GDN. Holding an auction requires a separate Wholesale Motor Vehicle Auction GDN.

What it does not allow:

• Selling vehicles directly to the public (retail sales)
• Holding a wholesale auction without the additional Wholesale Motor Vehicle Auction GDN

Wholesale dealers still need a permanent business address that meets all TxDMV office requirements (see the requirements section below). The main practical difference versus a retail license is no display lot requirement, which significantly reduces startup costs.

How to Get a Texas Dealer License: Step by Step

Step 1: Choose Your License Type

Review the license type table above and select the GDN category that matches what you plan to sell. If you plan to deal in more than one vehicle type, for example used cars and motorcycles, you need a separate GDN and a separate $50,000 bond for each category.

If you are unsure which license type applies to your business model, the TxDMV licensing page provides detailed descriptions for each type.

Step 2: Register Your Business

Before applying, set up your legal business entity:

• Form an LLC, corporation, or other entity, or register a DBA for a sole proprietorship
• Obtain an Employer Identification Number (EIN) from the IRS
• File with the Texas Secretary of State if required (mandatory for LLCs, corporations, and limited partnerships)

Step 3: Secure a Compliant Business Location

Finding a location that meets all TxDMV premises requirements is where most applicants run into delays. Check your location against the TxDMV Dealership Premises Checklist (Form LF628) before signing a lease.

If you are subleasing, you need a signed, notarised statement from the property owner confirming that you are authorised to operate a vehicle sales business at that address. Your lease must also cover the full 2-year license term.

Step 4: Complete the Dealer Education Course

Independent motor vehicle GDN applicants must complete a TxDMV-approved dealer education course before applying. The training covers Texas dealer laws, advertising rules, title handling, and compliance requirements.

• Duration: 6 hours for new applicants; 3 hours if completing the course for the first time at renewal
• Format: Fully online
• Cost: Up to $150 (set by TxDMV regulation; providers cannot charge more)
• Certificate: Required at application, uploaded through eLicensing
• One-time requirement: Once you complete the course, you are not required to retake it for any subsequent renewal

Wholesale, motorcycle, travel trailer, utility trailer/semitrailer, and franchised dealer applicants are not subject to this requirement.

TxDMV also offers free dealer training webinars covering advertising, ePLATE, title handling, and common compliance violations. These are open to all license types and are worth attending before your inspection.

Step 5: Obtain Your $50,000 Texas Auto Dealer Surety Bond

Most GDN license types require a $50,000 Texas auto dealer surety bond. A separate bond is required for each GDN category you hold. The following license types are exempt from the bond requirement:

• Travel trailer and utility trailer/semitrailer GDN licenses
• Franchised dealer licenses for new vehicle sales under a manufacturer franchise agreement. Note: if a franchised dealer also sells used vehicles, those sales require a separate independent GDN, and that GDN requires a $50,000 bond.

The bond protects your customers, not you. If a customer files a valid claim against your dealership, the surety pays out, and you are then liable to repay it. The surety bond is not insurance for the dealer. Bond cost:

• Starting at $375 per year with Bryant Surety Bonds (0.75% of the $50,000 bond amount for well-qualified applicants)
• Bad credit is not an automatic disqualifier. Bonds are available for applicants with all credit types. Applications use a soft credit pull only, which does not affect your credit score.
• To understand what affects your rate, see how surety bond cost is calculated.

Bond terms:

• Must cover the full 2-year license term
• Must begin on the first day of a month and expire on the last day of the month two years later
• All information on the bond must exactly match your GDN application: business name, physical address, and effective dates. Errors can be corrected with a bond rider but will delay your application.

Apply now to get a free quote within hours. Your rate is locked for 90 days from the date you receive it, giving you time to finalize your location and complete the rest of the application process. Bryant Surety Bonds is licensed to issue surety bonds in Texas under license number 2431403.

Step 6: Apply Through the TxDMV eLicensing Portal

Submit your application through the TxDMV eLicensing portal, TxDMV’s online self-service system for all dealer license applications. Create an account, select your GDN type, upload your documents, and pay your fees.

After submitting, your application is assigned a work item number. You can track progress using the TxDMV Application Status Check tool.

TxDMV will contact you if documents are missing or need correction.

Before submitting, double-check that your bond information, business name, address, and contact details are accurate. Mismatches between the bond and the application are one of the most common sources of delays.

Texas Blue Law note: Dealers may not be open for vehicle sales on both Saturday and Sunday. You must choose one of those two days to be open. Travel trailer and trailer/semitrailer dealers are exempt from this rule.

Step 7: Pay Fees and Receive Your GDN License

Fees due at application through eLicensing:

• $700 per GDN license type
• $90 per dealer plate (optional; ordered at application time)

Once approved, your GDN is issued for a 2-year term.

After receiving your license, display your GDN certificate and bond notice in a location easily accessible to the public at each licensed address.

Dealer plates are issued for the 2-year license term and can only be used for vehicle types you are licensed to sell. They may be used for test drives, transport, loaner vehicles, and other approved business purposes.

All licensed dealers must also set up an account in the TxDMV webDEALER system. Effective July 1, 2025, webDEALER is required to electronically process title and registration for all vehicle sales. Dealers without a webDEALER account cannot complete sales transactions.

TxDMV offers on-demand and live training webinars for webDEALER. See the TxDMV dealers page for schedules.

To keep your license active, you must sell or assign at least 5 vehicles per year. Falling below this threshold may result in license revocation.

How Much Does a Texas Dealer License Cost?

The total cost depends on your license type and business setup.

Estimated total startup cost: $1,200 to $2,500+

Wholesale dealers typically have lower startup costs than retail dealers because no display lot is required.

The surety bond is a recurring cost at each 2-year renewal. Your bond premium may decrease over time as your credit profile strengthens.

All fees are subject to change. Verify current amounts in the TxDMV eLicensing system before submitting your application.

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Texas Dealer License Renewal

GDN licenses are valid for 2 years and are renewed through eLicensing. To renew:

• Submit your renewal application before the expiration date (you may renew up to 180 days in advance)
• Pay the renewal fee
• Maintain an active $50,000 surety bond through the renewal term
• Complete the 3-hour dealer education course if you have not yet completed the one-time pre-licensing education requirement (independent motor vehicle GDN holders only)

Frequently Asked Questions

How many cars can I sell without a dealer license in Texas?

You can sell up to 4 personal vehicles per year (titled in your own name) without a license.

Selling 5 or more requires a GDN.

Selling even one vehicle that is not titled in your name also requires a GDN, regardless of how many other vehicles you sell.

Can I get a Texas dealer license without a lot?

Yes. A wholesale GDN license does not require a display lot. It allows you to buy and sell vehicles to other licensed dealers, but not to the public.

You still need a compliant permanent business address that meets TxDMV office requirements.

Do I need a dealer license to buy cars at auction in Texas?

Yes. A valid GDN is required to access dealer-only auctions. Any GDN type grants auction entry for attendance purposes.

The Wholesale Motor Vehicle Auction GDN is only required if you want to operate your own auction, not just attend one.

What is the difference between a wholesale and retail dealer license in Texas?

A retail (independent motor vehicle dealer) GDN allows you to sell to the public. It requires a display lot for at least 5 vehicles and a $50,000 surety bond.

A wholesale GDN allows you to sell only to other licensed dealers, with no lot requirement, but also requires a $50,000 bond. Both types grant access to dealer-only auctions.

Can I get bonded with bad credit?

Yes. Bryant Surety Bonds offers bonds to applicants with all credit types. Bad credit typically means a higher rate, not an automatic denial. Applications use a soft credit pull only, which does not affect your credit score.

How long does it take to get a dealer license in Texas?

Typical timeline from start to approval:

• Dealer education course: 1 to 2 days (online; independent motor vehicle GDN applicants only)
• Business registration and location setup: varies; typically 2 to 6 weeks depending on entity type, lease negotiations, and zoning
• TxDMV application review: typically 2 to 4 weeks after submission of a complete application
• Total: most applicants complete the process in 8 to 9 weeks from start, assuming no deficiencies in the application

What do inspectors look for during a dealer license inspection?

TxDMV inspectors verify your location against the Dealership Premises Checklist before approving your license. Common issues that cause failed inspections or delays:

• Office does not meet the 100 sq ft minimum, ceiling height, or equipment requirements
• Sign does not meet the 6-inch letter height, 100-foot visibility, or permanence standards (banners are not accepted)
• Display lot used for customer or employee parking (retail dealers)
• Local zoning does not permit motor vehicle sales; check with your municipality before committing to a lease
• Lease does not cover the full 2-year license term
• Subleased location without a signed, notarised statement from the property owner

What are the most common reasons a dealer license application gets rejected?

• Missing or incomplete documents
• Non-compliant business location
• Zoning that does not permit motor vehicle sales
• Surety bond information that does not exactly match the application: business name, address, or dates
• Failure to upload the dealer education certificate (independent motor vehicle GDN applicants)

Do I pay sales tax when buying vehicles for resale as a licensed dealer in Texas?

No. Licensed dealers in Texas do not pay motor vehicle sales tax when purchasing vehicles for resale. When you sell a vehicle, you are responsible for collecting the 6.25% motor vehicle sales tax from the buyer and remitting it to the county tax assessor-collector through the title and registration process.