California DMV Requirements for Used Car Dealers

Thinking about starting a used car dealership in California? Before you can legally sell vehicles, you must meet the specific requirements set by the California Department of Motor Vehicles (DMV).

This guide covers California DMV Requirements for Used Car Dealers;  including licensing, location, insurance, forms, and compliance so you can get approved and stay legal from day one.

Who Needs a California Used Car Dealer License?

Anyone who buys, sells, or offers for sale more than 5 vehicles per year for profit must be licensed as a used vehicle dealer by the California DMV.

Core DMV Requirements for Used Car Dealers

1. Complete a Dealer Pre-License Education Course

  • Must be 6 hours long and taught by a DMV-certified provider
  • Required for first-time applicants
  • Certificate of completion must be submitted with your application

2. Pass a Written DMV Test

  • 40-question test given at your local DMV inspector’s office
  • Covers:
    • Vehicle codes
    • Paperwork procedures
    • Consumer disclosures
    • Business operations

3. Submit a Complete Dealer Application Packet

  • Must include:
    • OL 248 – Application for Original Occupational License
    • REG 343 – Application for Title/Registration
    • LiveScan Fingerprints

4. Secure a DMV-Compliant Business Location

  • Your dealership must meet all zoning and signage requirements:
    • Enclosed office with lockable door
    • Display area for 2+ vehicles (for retail dealers)
    • Posted hours of operation
    • Permanent sign visible from the street (minimum 2 inches tall letters)
Man standing confidently at a dealership with text about passing DMV inspections through GotPlates.com prep.

 5. Obtain a Surety Bond ($50,000 Minimum)

  • Protects customers and DMV from fraud or financial loss
  • Rates vary based on credit but typically range from $300 to $900/year

6. Get a City or County Business License

  • Issued by your local business tax office
  • Required before DMV will approve your license

7. Submit Proof of Insurance

  • Must include:
    • General liability insurance
    • Garage liability (if vehicles are stored)
    • Minimum policy limits vary by city

8. Pass a DMV Site Inspection

  • DMV inspector will verify:
    • Signage and office setup
    • Bookkeeping and forms
    • Display area
    • Business hours posting
Woman reviewing DMV dealer license application paperwork with a magnifying glass at a dealership office.

Other Recommended Requirements

  • Seller’s Permit from CDTFA (required to collect sales tax)
  • Membership in IADAC (optional but offers legal templates and industry support)
  • BPA System or DMVNow access for faster title processing

Required Forms & Resources