How to Get a Wholesale Dealer License
Obtaining a wholesale car dealer license is not very difficult, and can vary from state to state usually with only slight differences in fees and testing requirements. A wholesale dealer license, is sometimes called a dealer auction license, enables a person to purchase vehicles from dealer auctions or directly from licensed dealers across the United States.
Car dealers regularly use the services of a wholesale dealer to purchase vehicles for their dealerships. Having a wholesale car dealer license allows for the selling of vehicles directly to dealers or auctions, but never to a member of the general public. A wholesale dealer cannot sell retail.
The steps to obtaining a wholesale dealer license or dealer auction license are similar nationwide, often only varying slightly in costs and procedures. The first step in the process is to contact the state Department of Motor Vehicles or Department of Transportation's Dealer Licensing department and obtain an application for a wholesale license. This can be done in person at a local office or the application can be downloaded from a website. Sometimes it's better to get the application in person, in case there are any questions about how to fill out the form. When filling out the form, it's important to make sure to include the complete names and addresses of anyone who will be working with you in the wholesale automotive business. After completing the form, return it in person or by mail to the office along with the required fee, which also varies by state.
Once the application is returned, a criminal background check is run on the applicant as well as those listed on the application. To be denied a wholesale license, an applicant usually must have a fraud conviction within the past decade or a felony conviction within the past five years. A nominal fee is also charged for the background check, normally between $10-$25 but can vary among states.
Next is passing the state's test or attending a training class to become a wholesale dealer. The test is usually given online, and most people take a pre-test prior to the real thing or take the test at required training classes. As with everything else, a fee is charged for this. Most people pass the test the first time, especially those who took the pre-test.
Part of the application procedure is purchasing a bond, because all wholesale dealers must be bonded in all states. The price of the bond, along with all the other associated fees, can vary among states but generally falls between $800-$1200 total to obtain a license.
An important point to remember once the license is obtained is that a wholesale dealer can attend auctions in any state and sell to any dealer in any state.
The wholesale dealer provides a valuable service to retail dealers by buying their excess vehicles and providing new inventory that the wholesaler has purchased from auction or other retail dealers.
By taking the time to do some research and carefully following the rules, it's relatively easy to become a wholesale car dealer in any state. You can also find additional resources and help here.
