Frequently Asked Questions – Obtaining a Dealer License in Texas
Q: Where can I complete the Application to become a Texas Used Car Dealer?
Q: How many cars can I sell without obtaining a Dealer’s License?
A: In Texas, you can “flip” up to 4 cars in a 12-month period. Flipping a car is the action of buying a car under market value, fixing the car up, then selling it for a profit.
Q: How long is my license valid for?
A: Two years.
Q: What does the Surety Bond cover?
A: TxDMV requires any person who is engaged in the business of buying, selling or exchanging motor vehicles or otherwise engaging in business as a dealer, directly or indirectly, including by consignment, to apply for and receive a General Distinguishing Number (GDN). The bond guarantees only two things: (1) Payment of all valid bank drafts, including checks, drawn by the applicant to buy motor vehicles, and (2) the transfer of good title to each motor vehicle the dealer offers for sale.
Q: Why do I need to provide a Surety Bond?
A: The State of Texas requires every Used Car Dealer to provide a $25,000 Surety Bond to get a Dealer License. The bond protects your customers, should you not run an ethical business.