License Requirement
In California, a dealer is defined by California Vehicle Code § 285. If your actions fall within the parameters of that section you must obtain a vehicle dealer license from DMV unless you meet one of the exceptions listed in California Vehicle Code § 286. There is a huge misconception that a person can sell less than 6 vehicles a year in California without a dealer license. This is simply not true. If you do not fall within the above exceptions you are susceptible to civil and criminal liability.
It should be noted that California Vehicle Code § 285 does not require a person to have a license in order to qualify as a dealer. If you’re “flipping” cars for a living without a dealer license you’re still a dealer in the eyes of the law. Consequently, all laws and regulations that apply to a dealer will apply to the sales transaction.
Used Vehicle Dealer License
A used vehicle dealer license allows dealers to sell used vehicles on a retail basis (including consignments) to consumers and on a wholesale basis to licensed vehicle dealers. .
Wholesale-Only License
If you’re not interested in selling vehicles at retail you should consider obtaining a Wholesale-Only dealer license. You can sell vehicles to other licensed dealers or export vehicles to other countries for sale. Under no circumstance may you consign a vehicle with a licensed dealer for a retail sale.
You are not required to maintain a a traditional dealership in a commercially zoned location and you are permitted to have a residential office. When a room in an apartment house building or single or multiple-unit dwelling house is used as an office, the room must be devoted exclusively to and occupied for the office of the dealer, be located on the ground floor, and constructed so as to provide a direct entrance into the room from the exterior of the building.
Pre-License Education Course
DMV requires all vehicle dealer applicants to take a course before they can apply for a license. We are tasked with educating applicants on which laws and regulations govern this industry. DMV does not administer these courses nor provide the course materials. They contract with private individuals and companies who write their own curriculum and teach the course. Consequently, the quality of each school will vary. We’ve been a DMV approved education provider since 2007.