How to Get a Dealer License in Texas in 7 Easy Steps

If you want to buy, sell, or exchange vehicles in Texas, you’ll need a dealer license issued by the Texas Department of Motor Vehicles (TxDMV). 

You are required to obtain a dealer license if you sell 5 or more vehicles per year, as outlined in Texas Transportation Code Sec. 503.004. The most common license is the General Distinguishing Number (GDN) License, which allows you to legally operate as a motor vehicle dealer in Texas.

This guide focuses primarily on how to get an independent (GDN) dealer license in Texas, including the requirements, costs, and step-by-step application process. Where relevant, we’ll also highlight key information for other license types.

Who Needs a Texas Dealer License?

In Texas, you must obtain a dealer license if you:

• Sell more than 4 vehicles per year
• Buy vehicles with the intent to resell them
• Operate as a dealer

You do NOT need a dealer license if:

• You sell 4 or fewer vehicles per year that are titled in your name
• You are selling a personal or business vehicle that was not acquired for resale
• You are a government agency selling vehicles
• You are selling a vehicle through a court-ordered sale (e.g., repossession, trustee, or executor sale)
• You are an insurance company selling a vehicle acquired through a claim
• You are selling an antique vehicle (25+ years old)
• You are a collector selling a special interest vehicle (typically 12+ years old and preserved as a hobby)

Texas Vehicle Dealer License Requirements

To get a GDN license in Texas, you must:

• Be at least 18 years old
• Have a compliant business location
• Complete a dealer training course
• Obtain a $50,000 surety bond
• Register your business (LLC, corporation, or DBA)
• Set up an eTAG account
• Complete fingerprinting (if required)
• Provide business and ownership details
• Submit a complete application through TxDMV

Required Documents:

Before applying, prepare the following:

• Assumed Name Certificate (DBA), if applicable
• Business formation documents (LLC, Corporation, etc.)
• Certificate of Filing (for LLCs/corporations)
• Lease agreement or proof of property ownership (including notarized statement if subleasing)
• Photos of your business location (including office and business sign)
• Dealer education certificate
• Government-issued ID
• Surety bond certificate

Texas Dealership Location Requirements:

Your business location must meet TxDMV requirements:

• A separate, dedicated office (not part of your living space)
• Located in a permanent building open to the public
• Equipped with a desk, chairs, internet, and a working business phone
• A permanently mounted business sign clearly visible to the public
• At least 100 square feet of interior office space
• Ability to conduct business privately with customers
• Compliance with local zoning laws and municipal requirements
• A valid lease or proof of ownership for the license period
• Regular business hours
• Secure storage for dealer plates

Additional requirements:

• Used vehicle dealers must have a display lot for at least 5 vehicles
• The location cannot be a residence, restaurant, gas station, or shared public space

How can I get a dealer license in Texas without a lot?

You can get a dealer license without a lot by applying for a wholesale dealer license, which does not require a display lot and allows you to sell only to other dealers.

Now that you’ve reviewed the requirements, follow this step-by-step guide to get licensed in Texas:

Step 1: Choose Your Dealer License Type

Determine which license best fits your business. The Texas Department of Motor Vehicles (TxDMV) offers several dealer license types depending on how you plan to operate:

Step 2: Register Your Business

Set up your business before applying:

• Form an LLC, corporation, or partnership
• Register your business name (DBA)
• Obtain an Employer Identification Number (EIN) from the IRS (required for most business entities)
• File with the Texas Secretary of State if required

Step 3: Secure a Compliant Business Location

You must establish a physical business location that meets all Texas dealer licensing requirements set by the TxDMV.

Your dealership must operate from a permanent, commercial location, not a residence or temporary/shared space. The office should be a separate, dedicated area where you can conduct business with customers privately and professionally. To qualify, your location should:

• Be located in a permanent building open to the public
• Include a fully equipped office with internet, a business phone, and a workspace for conducting transactions
• Provide at least 100 square feet of interior office space
• Display a permanently mounted exterior sign with your business name that is clearly visible
• Be open during regular business hours as required by TxDMV
• Comply with local zoning laws and municipal regulations
• Have a valid lease or proof of ownership covering the license period
• Include secure storage for dealer plates
• Allow you to conduct business with customers in a private setting

If you’re applying as a retail (used vehicle) dealer, your location must also include a display lot with space for at least 5 vehicles.

Step 4: Complete the Dealer Education Course

The required dealer education course is a one-time, TxDMV-approved online training that must be completed before applying (or for certain renewals).

• Duration:
  • 6 hours for new applicants
  • 3 hours for qualifying renewal applicants
• Format:
  • Fully online.
  • Covers Texas dealer laws, rules, and compliance requirements
• Cost:
  • Up to $150 per person (maximum allowed by law)
  • Most providers charge around $99–$149, depending on course type
• After completion:
  • You receive a certificate that must be submitted with your application

The Texas Department of Motor Vehicles (TxDMV) also offers free training webinars for new and prospective dealers. These sessions cover key dealer regulations, including advertising, vehicle sales and financing, trade-ins, titles, and eTAGs, while helping dealers stay compliant and avoid common violations. Taking advantage of these free resources can help you avoid delays and ensure your application is completed correctly.

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

To get licensed as an independent dealer in Texas, you must obtain a $50,000 auto dealer surety bond, which is required for each GDN license and must remain active for the full 2-year license term. 

The actual bond cost typically ranges from 1% to 3% of the bond amount for applicants with good credit, meaning most dealers pay between $500 and $1,500 per year. Your exact rate will depend on your credit profile and financial standing, with stronger credit generally resulting in lower costs.

A $50,000 surety bond is required for all independent and wholesale dealer licenses in Texas. However, franchised dealers are exempt from this requirement.

Step 6: Apply through the TxDMV eLicensing Portal

Create an account and submit your application through the TxDMV eLicensing system, which is used to apply, upload documents, and track your license status.

As part of the application, you will need to:

• Enter your business and ownership details
• Upload all required documents
• Select your license type(s)
• Submit your application and pay the required fees

After submission, your application is assigned a work item number and reviewed by TxDMV licensing specialists. If any information is missing or incorrect, you’ll be contacted to correct deficiencies before approval.

Step 7: Pay Fees and Finalize Your Application

To complete your application, you’ll need to pay:

• $700 application fee (per license type)
• Dealer plate fee ($90 each)

You can track your application status through the TxDMV system using your assigned work item number.

Once approved, you can purchase dealer plates (issued for a two-year term) to operate vehicles in your inventory. Dealer plates are assigned per vehicle and can only be used for vehicle types you’re licensed to sell. They may be used for test drives, transport, loaner vehicles, and other approved business purposes.

To maintain your license, you must remain actively engaged in business by selling or assigning at least 5 vehicles per year. Failing to meet this requirement may result in license revocation.

To avoid delays, make sure your application is complete and accurate before submitting. Double-check documents, bond details, and contact information.

How Much Does a Texas Dealer License Cost?

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

Estimated startup cost: $1,200 – $2,500+

Your total cost depends on several factors, including your credit score (which determines your bond rate), business location expenses such as rent and setup, and the number of licenses you apply for. Wholesale dealer licenses can often have lower startup costs since they don’t require a display lot, though total expenses vary based on the business setup.

Texas Dealer License Renewal Process

Dealer licenses in Texas are valid for 2 years. To renew:

• Submit your renewal application before expiration
• Pay renewal fees
• Maintain an active surety bond

You can renew up to 180 days in advance.

FAQs

What is a GDN in Texas?

A General Distinguishing Number (GDN) is a license issued by the Texas Department of Motor Vehicles (TxDMV) that allows you to legally operate as a vehicle dealer in Texas. GDN licenses are issued by vehicle type and authorize you to buy, sell, or exchange those specific types of vehicles. If you wish to sell multiple types of vehicles, you may submit multiple GDN applications.

Can I sell cars without a dealer license in Texas?

Yes, you can sell up to 4 personal vehicles per year without a dealer license. Selling 5 or more vehicles annually requires a dealer license.

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

Most dealer license applications in Texas are approved within 2 to 4 weeks after submission. Processing times may be longer if your application is incomplete, documents are missing or incorrect, or any additional verification is required.

What are the most common reasons dealer license applications get rejected?

Dealer license applications in Texas are often rejected due to:

• Missing or incorrect documents
• Non-compliant business location
• Zoning violations
• Incomplete application submission
• Failure to obtain the required surety bond

Carefully reviewing your application before submission can help avoid delays or rejection.

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

Yes, you need a valid dealer license to participate in dealer-only auto auctions in Texas. Under Texas law, you must hold a General Distinguishing Number (GDN) to operate as a vehicle dealer, and wholesale transactions, including many dealer-only auctions, are limited to licensed dealers. A wholesale dealer license is the most common option for auction access. Without a license, you are typically limited to public auctions.

Do I need to pay sales tax if I am a licensed dealer in Texas?

No, licensed used car dealers in Texas do not pay sales tax when purchasing vehicles for resale. However, when you sell a vehicle, you are responsible for ensuring that motor vehicle sales tax (6.25%) is collected from the buyer and properly submitted through the title and registration process.