How to Start an Online Car Dealership in California

Becoming a Dealer

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   Decide whether you will sell new cars or used cars. In California, you can either be a new car dealer or a used car dealer.^[2] In order to deal, sell, or broker you must be licensed as either a new car dealer or a used car dealer. Think about the types of vehicles you will be selling. Franchised, new car dealers are allowed to sell new and used cars, but used car dealerships are only allowed to sell used cars.^[3]

   1. New car dealerships must be franchised through a manufacturer. If you plan to sell new cars, then you will have to check with the manufacturer of the new cars that you plan to sell to make sure that you will meet their guidelines. New car dealership may also sell used cars.
   2. Used car dealerships may only sell used cars and they are not allowed to sell new cars.
   3. Keep in mind that selling cars online will still require some in-person paperwork. This is because the paperwork required to purchase a car must be done in ink.^[4]
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   Take a Pre-License class if you want to be a used car dealer. All used car dealers are required to take a six hour Pre-License Class with a Licensed Car Dealer Education Provider. New car dealers must contact their franchising manufacturer to determine what the specific licensing requirements are for the manufacturer. Manufacturers have their own educational standards for car dealers.

   1. To find a list of course providers for used car dealers, visit the DMV website: https://www.dmv.ca.gov/portal/dmv/?1dmy&urile=wcm:path:/dmv_content_en/dmv/vehindustry/ol/dlr_edu_provider
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   Contact your local inspector's office. These are the people responsible for evaluating your application. They will be able to answer any questions you may have about the dealer licensure process.

   1. If you have questions about the dealer licensing process, then you can call (916) 229-3126.
   2. You can also visit the DMV website to find a list of inspectors who can evaluate your application: http://www.dmv.ca.gov/portal/dmv/?1dmy&urile=wcm:path:/dmv_content_en/dmv/fo/inspector_office
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   Get the dealer's handbook. The dealer's handbook contains lots of important information for anyone who wants to become a car dealer in California. Obtain and read this handbook because it can help you to navigate the entire process.

   1. You can find the dealer's handbook at: http://www.dmv.ca.gov/portal/dmv/detail/pubs/reg_hdbk_pdf/toc/
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   Undergo a criminal background investigation. In order to get a dealership license, all applicants must get a background check done, which may take up to four months to complete.^[5] This investigation is done to help avoid licensing people who may turn out to be unethical dealers.

   1. If you are concerned that you might not pass a background check due to a criminal record, then you can file what is called an 'abbreviated application.' You will still have to pay a fee of $175, but this option will allow you to wait and see if you pass the background check rather than paying all of the other costs involved up front.^[6]
   2. Keep in mind that all dealers and salespersons are required to get fingerprinted.^[7]
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   File an application for a dealer's license. There are various forms you will need to file, depending on the kind of dealership you wish to run. Make sure you file all of the appropriate paperwork. Contact the inspector's office if you have questions regarding proper forms. The DMV recommends that you:^[8]

   1. If you plan to open a new car dealership, then you can download the required forms at: http://www.dmv.ca.gov/portal/wcm/connect/aa0a7d1c-8084-40d2-9266-7801a9f498e8/ol248n.pdf?MOD=AJPERES
   2. If you plan to open a used car dealership, then you can download the required forms at: http://www.dmv.ca.gov/portal/dmv/?1dmy&urile=wcm:path:/dmv_content_en/dmv/forms/ol/ol248u
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   Pay all fees associated with licensure. If you do not pay all the fees, you will not get your license to operate. Manufacturer fees and government fees may differ. It may cost upwards of $800 to fully pay for your license.^[9] These include:^[10]

   1. $175 nonrefundable initial application fee
   2. $1 Family Support Program fee
   3. $100 Auto Broker fee (in addition to application fee)
   4. $70 per each branch location
   5. $300 New Motor Vehicle Board fee
   6. $71 per car dealer plate, plus county fees
   7. $73 per motorcycle dealer plate, plus county fees