How To Become a Wholesale Car Dealer in California
Wholesale car dealers buy cars and sell them to other dealers.They don't make sales to the public.If you follow the requirements of the Department of Motor Vehicles, you can become a wholesale dealer in California.Use the steps below to become a wholesale car dealer in California, whether you are hoping to operate a successful business or just getting in to switch to retail at a later date.
Step 1: The application checklist from the Department of Motor Vehicles.
You can complete your whole dealer application with the help of the checklist PDF provided by the Department of Motor Vehicles.Before you can be eligible to receive your dealer license, you will need to complete and submit a number of documents.If you don't understand part of the application, you can follow the checklist's included links or read the guide from the Department of Motor Vehicles.
Step 2: Make sure you have a valid drivers license.
If you want to be a legally-licensed dealer, you need an in-state drivers license.Online opportunities to get a dealer's license out of state are usually a scam.Make sure your California drivers license is current.
Step 3: Purchase or lease a business.
You need a location to conduct business in order to become a wholesale dealer.You don't need a store or a car lot.It doesn't matter if they are the same place, you need somewhere to store your vehicles.You can't use your home as a business location.You should have a lease contract, rental agreement, or deed to your business location once you have it.There is a photograph of your business location in the dealer application guide.During the application process, your place of business will be looked at.Make sure it is in compliance with all the requirements outlined in the place of business inspection.
Step 4: Pick a name for the business.
You have to come up with a name for your business.Think of something like "Johnson Wholesale Auto Traders" to explain what you do.Prospective customers will know that you are what they are looking for.You will need to file a Fictitious Name Statement with your state if you want to apply for a dealer license.
Step 5: You need a resale permit.
The Equalization Resale permit allows you to collect taxes.The application is free but you may have to pay a deposit.You have to keep this permit to get a wholesale dealer license.
Step 6: You should get a business license.
To start a wholesale dealer business, you will need a city and/or county business license.You should check with your local chamber of commerce to apply for a business license.You need a copy of this license or a letter stating that your county does not issue business licenses to get a wholesale dealer license.
Step 7: A surety bond is needed.
A surety bond is a guarantee that the dealer will follow the law when dealing with sellers and customers.If a dealer commits fraud, the bond pays damages to harmed parties.The bond must be worth at least $10,000 for a wholesale dealer.You will only pay a percentage of the value based on your credit history.You can get a quote from a surety bond agency.Good credit dealers will pay about $100.If you have medium credit, you can expect to pay between $100 and $500.The dealers with bad credit will pay more than $300.
Step 8: The Dealer Education Program needs to be completed.
To move forward with the application, you will need to complete the Dealer Education Program and obtain a certificate of completion.There are a number of locations where this program can be found.
Step 9: The test is for used dealers.
You can take the Used Dealer Test if you have completed the education program.What you have learned in the Dealer Education Program will be assessed by this test.Each time you take the test, you will have to pay a $16 fee.To complete your dealer application, you have to pass the test.
Step 10: The forms need to be filled out.
There are a lot of forms to fill out.Go back to the checklist and either click on the provided links or search for the forms by number.To the best of your knowledge, fill out each application completely.
Step 11: Attach the documents you need.
Attach the documents requested by the checklist to the application forms.Make sure to check the order of your documents in the cases where these are requested to be in a specific order.Proof of your business operations and location can be found in the required documents.
Step 12: For completeness, check over your application.
This is a complicated application and you need to re-read it to make sure all the parts are present and complete.You will have to pay the application fee again if your application is incorrect.
Step 13: You have to submit your application and fee.
Bring your complete application to the nearest occupational licensing office.The locations of these offices can be found on the website.Pay your application fees by hand in your documents.If your application has been accepted or rejected, you will be notified.The application fee is non-refundable.
Step 14: Sell vehicles to buy them.
Wholesale dealers can buy vehicles from a lot of different sources.Buy larger quantities of cars at wholesale auctions.New and used car dealers should communicate with each other to make bids for unwanted vehicles.You can buy vehicles from other dealers.When you see a good deal, jump on it.
Step 15: You should create an online presence for your business.
All businesses need to operate online as well as they do in person.Creating a website that displays your inventory and makes it easy to contact you is what this means.The website should act as an extension of your location.You can find cars to buy on other websites.
Step 16: Deals are made with buyers.
Building and maintaining relationships with dealers is the most important part of being a wholesale dealer.You want to become known as a fair negotiator who provides accurate representations of vehicle quality.Even if you don't make a lot of money on some sales, that's better than losing your reputation and not being able to make sales at all.It's easier for your customers to buy your cars if you factor the transportation cost into the price.
Step 17: You should consider modifying your license.
There can be more money in retail car sales.If you modify your license to retail, you can simply expand your business and not change it.For a fee of $70, you can modify your dealer license.