How to Get a Dealer License in Texas in 8 Easy Steps
Under Texas Transportation Code Sec. 503.004, all motor vehicle dealers must be licensed and bonded in every county where they operate. Each type of dealer is required to obtain a General Distinguishing Number (GDN), which permits the sale of used vehicles. To sell new vehicles, you will also need a franchise dealer license. Additional GDNs are necessary for other types of used vehicles, such as motorcycles or trailers.
The Texas Motor Vehicle Division manages the licensing process and issues GDNs to all categories of motor vehicle dealers in Texas.
After you’ve identified which license you will be applying for, follow these steps to apply for your Texas auto dealer license through the DMV:
1. Create a Texas DMV eLicensing account
Visit the Texas DMV eLicensing portal and create an account. This portal is used to submit your application, upload documents, and track your license status.
2. Complete the dealer training course
First-time applicants for a Texas Dealer License or General Distinguishing Number (GDN) are often required to complete a six-hour web-based dealer education course. This course is mandatory for those selling vehicles such as cars, trucks, motorhomes, neighborhood electric vehicles, recreational off-highway vehicles, ATVs, and UTVs. An owner or manager listed on the application must complete the course.
3. Establish a business location
To obtain a Texas Dealer License, you must have a compliant place of business with an office that meets local zoning requirements. Offices in private residences must be separate from the living space. The office must include a desk, two chairs, internet, and a telephone in the dealership’s name. Dealers sharing a location must have separate office areas and either own or lease the property for the license term. A permanent sign with the dealership name must meet specific size and visibility requirements.
A display lot is required for retail dealers, with space for at least five vehicles while wholesale dealers are exempt from some display lot requirements. Up to four retail dealers or eight wholesale dealers can share one building, but retail and wholesale dealers must operate in separate locations.
4. Fill out the license application and upload supporting documents
Use your eLicensing account to apply for a General Distinguishing Number (GDN) and any additional GDN types you might need. Each GDN type requires a separate application. You will have to provide details like your business name (DBA), location, ownership information, legal structure, and any relevant history. You can refer to Section 3.2 of the Texas DMV Motor Vehicle Dealer Manual if you need more information about the different license types.
After that, submit any supporting documents such as an Assumed Name Certificate, your Certificate of Incorporation, and, if applicable, criminal history information.
5. Register your business name
Most dealers are required to register their business names with the Texas Secretary of State. Some entities may only need to register with their local county.
6. Obtain a $50,000 surety bond
In order to get licensed, you need to purchase a two-year Texas auto dealer bond:
- The bond must remain active for the duration of the license – two years.
- Separate bonds are required for each GDN license.
- Certain license types, such as franchised dealers, travel trailer dealers, and utility/semitrailer dealers are exempt from the surety bond requirement.
You can lower your bond cost by demonstrating financial reliability. Your premium, typically 1-3% of the bond amount, depends on your business’s financial health. Improving your financial records, paying off debts, and maintaining good practices can reduce costs and strengthen your business stability over time.
7. Register for an EIN (if applicable)
Texas auto dealers operating as corporations, partnerships, LLCs, or limited partnerships must obtain an Employer Identification Number (EIN) from the IRS to apply for a dealer license. This number is essential for identifying your business and is required for tax purposes. Securing an EIN is a quick and straightforward process that can be completed online in just a few minutes.
8. Submit your application online
Double-check and submit your eLicensing application, upload the required documents, and pay a $700 licensing fee for each independent license type, plus $90 for dealer plates or stickers. Use the DMV’s license look-up tool to track your application status.
Upon approval, your Texas auto dealer license will be valid for two years.
Important updates for Texas dealers
- New webDEALER Requirement (Effective July 1, 2025)
Starting July 1, 2025, all licensed Texas dealers must use the TxDMV webDEALER system to electronically process vehicle title and registration. Dealers without webDEALER accounts will be unable to complete sales transactions after this date. Training for the webDEALER system is available online 24/7 in English and Spanish or through live webinars. - Increased Application Processing Times
New anti-fraud measures have extended processing times. Dealers can renew licenses up to 180 days before expiration—early submission is recommended. - Fingerprinting Requirement for Certain Licenses (Effective June 1, 2024)
Salvage dealers and in-transit drive-a-way operators must complete fingerprinting for applications submitted after June 1, 2024. For detailed information about fingerprinting requirements and FAQs, visit the TxDMV Fingerprinting resource page. - New License Requirements for Specific Licenses (Effective June 1, 2024)
New rules for Dealer, Manufacturer, Distributor, Converter, and In-Transit licenses include updated plate and licensure requirements. Resources and checklists are available here.
How much does it cost to get a car dealer license in Texas?
The cost of applying for a GDN license is $700 plus an additional $90 for each dealer license plate. A franchise dealer license fee is $350. Sometimes there might be additional processing fees, depending on the type of license you’re applying for.
Also note that licenses are issued for a two-year term and will be required to pay renewal fees, which are $400 per GDN and range between $350-$1500 for franchise dealers.
How to get a dealer’s license without a lot?
Only nine states in the US do not require auto dealers to have a lot: Alaska, Arkansas, Georgia, Kansas, Mississippi, New Hampshire, North Carolina, Vermont, and Washington.
In Texas, having a lot that can fit at least 5 vehicles is mandatory for retail licenses. Otherwise, if you don’t own a lot and can’t afford one for the time being, here are your three options:
- Get a wholesale dealer license instead – it allows you to operate without a lot, but it only permits buying, selling, and trading cars with other dealers, not with end users.
- Rent a lot to meet the requirements. It’s not necessary to own the land.
- Partner with a rental lot to use their space at a lower cost.
Frequently Asked Questions
What are the types of Texas dealer licenses?
Texas offers different types of dealer licenses, including Retail and Wholesale Licenses, Franchised Dealer License, Converter License, Salvage Dealer License, Manufacturer License, Distributor License, In-Transit License, Vehicle Lessor License, and Lease Facilitator License. Each license has specific requirements and exemptions.
How long does it take to get a Texas dealer’s license?
Approval typically takes 2-3 weeks after the state receives your dealer application. If your application is incomplete, the state will send you a letter requesting the missing information or corrections to any documents. Here are some application tips and more information about the application process itself.
What happens if my bond expires before my license?
You must renew your bond to maintain compliance. An expired bond can result in license suspension.
Can I get a dealer license at my home?
Whether you can use your home as a dealer office depends on state regulations. The property must meet zoning and DMV requirements, including having an office separate from your primary residence. If your home doesn’t qualify, renting a property is often a viable alternative.
Why do I need a dealer license?
A dealer license allows you to buy vehicles at exclusive dealer-only auctions, often 20% cheaper than retail, and sell cars to others. Depending on the license type (retail or wholesale), you can sell to the public, other dealers, or both, with variations by vehicle type and dealership category.
- Bio
- Latest Posts
Great information shared thanks for it US Dealer Licensing from the same field who helps in your dealer licensing service.
Thank you for the feedback!
Good morning
Do you need insurance to open a used car dealership in Texas?
Yes, to open a used car dealership in Texas you need to carry Garage Liability Insurance with a minimum coverage of $85,000 Combined Single Limit. This insurance protects against bodily injury or property damage resulting from incidents related to dealership operations, such as accidents during test drives.
While not legally required, many dealers also choose to carry additional coverage, such as inventory insurance, workers’ compensation, and others, to better protect their business.
It’s also important to note that the required surety bond is not the same as insurance.
For an even more detailed explanation, check out our free ebook guide: How to Start a Car Dealership in Texas.
How do I get boat dealers license
If you want to sell boats in Texas, you do not need a traditional Texas dealer license issued by the Texas Department of Motor Vehicles (TxDMV). Instead, boat sales are regulated by the Texas Parks & Wildlife Department (TPWD).
To legally sell boats in Texas, you will need to apply for a Boat (Marine) Dealer/Distributor License through TPWD.
For more details and application requirements, visit the TPWD website.
Can Georgia Dealer License by used here in Texas to Sell and Purchase???
No, you can’t. Each state has its own licensing requirements.
If you plan to sell or buy vehicles in Texas, you will need to obtain a Texas dealer license that aligns with your business activities.
Under Texas law, any individual or business that buys, sells, or exchanges more than five vehicles registered in their name within a calendar year — or sells even a single vehicle not titled in their name — must hold a valid Texas dealer license.
I really need one. Whole sales or savage license.
Before applying for your dealer license, it’s essential to determine the type of vehicles you plan to sell. In Texas, different dealer licenses come with specific permissions and restrictions.
In general,
– Wholesale Dealer License – Allows you to sell vehicles to other licensed dealers but not directly to the public.
– Wholesale Motor Vehicle Auction License – Permits offering vehicles for auction exclusively to licensed dealers.
– Salvage Dealer License – Authorizes the buying, selling, repairing, or rebuilding of salvage and nonrepairable motor vehicles.
If you intend to sell multiple types of vehicles, you may need a separate General Distinguishing Number (GDN) for each category. Some licenses, such as the Salvage Agent License, require either selecting an existing GDN or applying for one as part of the licensing process.
For a more detailed guide, check out our free ebook, How to Start a Car Dealership in Texas, here: https://www.bryantsuretybonds.com/how-to-start-a-car-dealership-in-texas-ebook. Additionally, I recommend reviewing the Texas DMV’s eLicensing User Guide for step-by-step instructions: https://www.txdmv.gov/sites/default/files/body-files/eLICENSING-UserGuide_Independent-GDN-Licensees.pdf.
Hope this helps, and best of luck with your dealership journey!
I’m planning on opening my dealership soon. ! Is the $50K bond paid each year?
The bond is issued for the same term as the duration of the license, which is two years. I hope it helps.