In Texas, anyone wishing to sell used cars as an independent dealer must first acquire a license from the Texas Department of Motor Vehicles. Dealer licenses are called General Distinguishing Number (GDN) licenses and authorize the licensee to buy, sell and exchange used vehicles. There are multiple types of GDN licenses. To sell used cars, you will need a Motor Vehicle GDN. This particular license does not authorize the sale of used motorcycles or any type of new vehicle, both of which require separate GDN licenses.
Access the Texas Department of Motor Vehicle’s website and download the application for a General Distinguishing Number (see Resources).
Find a suitable location for your business. You must determine whether local zoning regulations allow you to operate a used car dealership on the site. The application must include documentary proof that you hold a lease on the property or own it outright. Additionally, you must include photographs, maps and physical measurements of the site. Shoot the photographs as instructed in the application.
Choose a business name. Register this name with your local county clerk’s office. You will receive an assumed name certificate. Include a copy of this certificate in your application.
Acquire communication technology for your business and install it. You must have a land-based telephone line, listed under your business name. You must have a fax machine and an answering machine, to be turned on between the hours of 8 a.m. and 5 p.m., Monday through Friday. Create an e-mail account for your business.
Acquire a two-year, $25,000 surety bond from a bonding company. Sign and date the bond, and include it with your application. Make sure that the information on the bond matches the information on your application exactly.
Register an Employer Identification Number (EIN) with the IRS. You can register a number online. Visit the IRS’s website to do so (see Resources).
Prepare a financial statement showing your assets and liabilities. Include it with your application.
Acquire a photocopy of your driver’s license. Include it with your application.
Complete your application. Be sure to include all supporting documentation and fees. Make a copy for your records. Mail the original to the indicated address. Though processing times vary, you can expect it to take at least a month. If your application has deficiencies, you will be advised by mail how to correct them. When the license has been approved, it will be mailed to you.
Holders of a Motor Vehicle GDN are not authorized to deal in new cars. This requires a Franchised Dealer License, for which you must meet additional requirements.