California Dealer License Requirements: Exam, Bond, and Fees

To meet California’s dealer license requirements, you need to complete pre-licensing education (for used and wholesale applicants), pass the DMV dealer exam, clear a criminal background check, secure an established place of business that passes inspection, post a $50,000 surety bond, hold a seller’s permit from the CDTFA, and submit the application package with the required fees to the DMV’s Occupational Licensing unit. Operating without the license is a misdemeanor under Vehicle Code Section 11700, carrying up to six months in jail and a $1,000 fine, so the paperwork matters before the first sale.

Who Needs a License and Which Type

California defines a dealer as any person who, for money or other value, buys, sells, or negotiates the sale of vehicles as a business. There is no numeric threshold. If you are acquiring vehicles with intent to resell for profit, you need a license.¹

The license type shapes everything else in the process:

New vehicle dealer, which sells new vehicles to the public and requires a franchise letter of authorization from the manufacturer for each line carried.
Used vehicle dealer, the most common independent license for retail used sales.
Wholesale-only dealer, which sells only to other licensed dealers and never to consumers.
Autobroker endorsement, a $75 add-on that lets you arrange the purchase of a vehicle you don’t own for a fee, with extra advertising and disclosure duties.²

Retail licenses that allow direct sales to consumers carry the strictest requirements. Pick the license type first, because the forms, education requirement, and facility expectations all follow from it.

Pre-Licensing Education and the Dealer Exam

Applicants for a used vehicle dealer or wholesale-only license must complete a pre-licensing course from a DMV-approved provider before submitting the application.³ The course covers dealer responsibilities, Vehicle Code rules, record-keeping, and licensing basics. New vehicle dealers are not required to take this course.

After the course, you sit for a written exam administered by the DMV. It covers title and registration procedures, advertising rules, fees, and record-keeping under Vehicle Code Section 11704.5. You need at least 70% to pass.⁴ Fail it, and you wait a week and pay $16 to retest.⁵

Background Check and Grounds for Denial

Every owner, partner, or corporate officer named on the application submits electronic fingerprints through Live Scan. The prints go to the California Department of Justice and the FBI. Out-of-state applicants who cannot appear for Live Scan submit fingerprint card ADM 1316 instead.⁵

The DMV can refuse a license on several grounds. Convictions involving dishonesty or misconduct tied to the vehicle industry are the most common reason for denial. A previously revoked dealer license in California or another state, false statements on the application, or a business history showing substantial irregularities can all sink the application. If the business is structured so that someone personally ineligible effectively controls it, the DMV will deny the business entity as well.⁶

Your Established Place of Business

California does not let you run a dealership out of your garage or a temporary setup. The Vehicle Code requires an “established place of business,” meaning a place actually occupied continuously or at regular periods where all books and records are kept.⁷ The construction cannot be temporary, transitory, or mobile. A trailer coach used as an office is acceptable if it is not part of the sales inventory and otherwise meets the rules.⁸

Before issuing a license, a DMV inspector visits the site. Expect them to check:

A dedicated office used for dealership operations, furnished for conducting business and storing records (desk, chairs, filing cabinet).
A display area for vehicles that is visible from a public road, if you sell retail.
A permanent exterior sign clearly identifying the dealership name.
Local zoning documentation from your city or county confirming the location is properly zoned for vehicle sales.
Posted regular business hours.

Zoning is where applicants most often get caught out. A location zoned for general commercial use is not automatically zoned for vehicle sales. Confirm with your local planning department before signing a lease.

Surety Bond, Insurance, and Seller’s Permit

Every California dealer must file a surety bond with the DMV before licensing. The standard amount is $50,000. Dealers who sell only motorcycles or all-terrain vehicles post a $10,000 bond.⁹ The bond protects consumers who lose money to a dealer’s fraud or licensing violations. You pay an annual premium to a surety company rather than the full bond amount upfront.

Operating without a valid bond is itself a violation. Section 11713 prohibits doing business without a bond in force, and doing so can trigger suspension or revocation.¹⁰

You also need garage liability insurance on vehicles in your inventory and on your premises. California’s minimum auto liability limits apply: $15,000 bodily injury per person, $30,000 per accident, and $5,000 property damage. Most dealers carry higher limits given the value of a typical lot.

Finally, both wholesalers and retailers must hold a Seller’s Permit from the California Department of Tax and Fee Administration. The permit lets you collect sales tax on transactions and buy vehicles for resale without paying tax at acquisition. It must be prominently displayed at your place of business.¹¹

Application Package and Fees

With education done, the exam passed, prints cleared, bond secured, and the location ready, you assemble the application for the DMV’s Occupational Licensing unit. The DMV bundles the forms into packets: OL 248N for new vehicle dealers and OL 248U for used and wholesale-only dealers.⁵

The core forms include:

OL 12, Application for Original Occupational License (Part C), capturing business ownership details.
OL 21A, Original Application for Occupational License (Part A).¹²
OL 25, the Dealer Surety Bond form.
OL 29B, a Personal History Questionnaire completed by every person listed under ownership on the OL 12.
DMV 8016, the Request for Live Scan Clearance receipt for each owner or officer.
The Certificate of Completion from the pre-licensing education program, for used and wholesale-only applicants.
A copy of your CDTFA Seller’s Permit.

Corporations, LLCs, and limited liability partnerships also file a Statement of Information with the California Secretary of State and include a copy with the application.

Initial Fees

$175 non-refundable application fee.
$1 family support program fee.
$92 per auto dealer plate, plus applicable county fees.
$94 per motorcycle plate, plus applicable county fees.
$300 New Motor Vehicle Board fee per location, for new vehicle dealers only.

These fees are listed on the DMV’s dealer license page and are subject to change.⁵ Once the DMV has the complete package and fees, an inspector schedules the site visit. The license issues only after that inspection confirms the facility meets every requirement.

Federal Rules the State License Doesn’t Cover

A California license authorizes you to operate under state law, but federal obligations attach the moment you start selling. The FTC Used Car Rule requires a Buyers Guide posted prominently on each used vehicle before display, and a Spanish-language guide if the sale is conducted in Spanish.¹³ Any cash transaction over $10,000 (including cashier’s checks, money orders, and traveler’s checks in qualifying retail sales) triggers IRS Form 8300.¹⁴ Odometer disclosure at title transfer is required for vehicles less than 20 years old, so all 2007 and newer model-year vehicles still require disclosure in 2026.¹⁵ Dealers who arrange financing must maintain a written identity theft prevention program under the FTC’s Red Flags Rule.¹⁶

Keeping the License Once You Have It

A California dealer license is not permanent. Renewal uses form OL 45 with a $125 renewal fee plus the $1 family support program fee, and dealers complete continuing education every two years. Miss the expiration date and the license is automatically canceled, with a $175 penalty on top of the standard renewal costs.¹⁷ New vehicle dealers pay an additional $300 New Motor Vehicle Board fee per location at each renewal.⁵

You also have to keep the license clean. The established place of business and the surety bond must remain in force continuously. Vehicle Code Section 11713 lists dozens of prohibited practices that can trigger suspension or revocation, including false or misleading advertising, advertising vehicles not actually in stock, delivering a vehicle that fails California equipment requirements, and failing to complete title transfer within the required timeframe. The DMV investigates complaints and audits dealer records.¹⁰

1
California Legislative Information. California Code VEH – Issuance of Licenses and Certificates to Manufacturers, Transporters, and Dealers
2
California Department of Motor Vehicles. 2.010 Autobroker (VC 166)
3
California Department of Motor Vehicles. Dealer Education Providers
4
Legal Information Institute. California Code of Regulations Title 13 268.04 – Dealer Examination Requirements
5
California Department of Motor Vehicles. Vehicle Dealer License
6
California Legislative Information. California Code Vehicle Code 11703 – Grounds for Refusal of License
7
California Legislative Information. California Code VEH 320 – Established Place of Business
8
Legal Information Institute. California Code of Regulations Title 13 270.00 – Place of Business
9
California Legislative Information. California Code Vehicle Code 11710 – Dealer Surety Bond
10
California Legislative Information. California Code VEH 11713 – Prohibited Conduct
11
California Department of Tax and Fee Administration. Obtaining a Seller’s Permit
12
California Department of Motor Vehicles. Occupational Licensing Forms
13
Federal Trade Commission. Dealer’s Guide to the Used Car Rule
14
Internal Revenue Service. Understand How to Report Large Cash Transactions
15
Texas Independent Automobile Dealers Association. Odometer Disclosure Exemption Update: 2026 Is a Timeline Milestone
16
Federal Trade Commission. Red Flags Rule
17
California Department of Motor Vehicles. OL 45 Renewal Application