How to start a used car dealership in Texas
Last verified: November 9, 2026. Every rule links to its official source.
To start a used car dealership in Texas you need a general distinguishing number (GDN), the dealer license issued by the Texas Department of Motor Vehicles (TxDMV). Plan on a location your city approves for vehicle sales, a 6-hour course, a $50,000 dealer bond and a $700 application fee per category. Financing your own customers adds a license from the OCCC, the Office of Consumer Credit Commissioner.
Texas at a glance
| What | The rule | Source |
|---|---|---|
| License | Independent motor vehicle GDN, issued by TxDMV through its eLICENSING system | TxDMV: independent GDN |
| Main exemption | Selling or offering fewer than five vehicles of the same type in a calendar year, all owned and registered in your name | Transportation Code 503.024 |
| Application fee | $700 per GDN category, covering the 2-year term | TxDMV eLICENSING user guide |
| Dealer bond | $50,000 surety bond for a 2-year term | Transportation Code 503.033 |
| Course | At least 6 hours online, priced at no more than $150 | 43 TAC 215.161 |
| Premises | An office of at least 100 square feet with a 7-foot ceiling, display space for five vehicles, open at least 4 days a week | 43 TAC 215.140 |
| Processing time | 84 days on average in fiscal year 2025, against a 30-day target | TxDMV FY 2025 Chairman’s Report |
Which agencies will you deal with?
You will deal with up to seven offices. The city comes before TxDMV, and the county offices come right after the license.
| Who | What they grant or collect |
|---|---|
| TxDMV | The GDN, dealer plates, webDEALER and ePLATE for titles and plates, and premises and plate reviews |
| Your city | Zoning, the certificate of occupancy or other official proof the site is approved, and sign permits where required |
| County tax assessor-collector | Title applications with the sales tax, webDEALER access, and the monthly inventory tax statement with its prepayment |
| County appraisal district | The annual inventory tax declaration |
| Texas Comptroller | The Seller-Financed Sales Tax Permit and its returns, only if you finance sales yourself |
| OCCC | The motor vehicle sales finance license, if you finance sales yourself or sign finance contracts as the seller and assign them |
| Secretary of State or county clerk | Your entity filing and any assumed name certificate |
How will you sell: cash, outside lenders or your own financing?
Decide this first, because it sets which licenses you need.
- Cash. The buyer pays the full price at the sale. The GDN covers you.
- Outside lenders. If you sign a retail installment contract as the seller and assign it to a bank or finance company, the OCCC says you need its license, even when you assign every contract right away (OCCC Bulletin B23-1).
- Your own financing (buy here pay here). The OCCC says a sale may be considered financed when the buyer pays over time, even with no interest. You need the OCCC license and the Comptroller’s permit.
A wholesale GDN is the other option: you may sell or exchange vehicles only with other licensed dealers, and you need no five-vehicle display area and no pre-licensing course. You can never sell to the public on it.
How do you start a used car dealership in Texas, step by step?
Work through these 13 steps in order. The city’s approval and the finished premises come before the application; fingerprints come after it. The Texas dealer license checklist puts every form, fee and office on one page, and the step-by-step GDN guide covers steps 2 to 12 in detail, as its Steps 1 to 11.
- Decide how you will sell. Retail or wholesale only; cash, outside lenders or your own financing. The answer sets your GDN type and whether step 13 applies.
- Form the business and register the name. TxDMV wants any Secretary of State certificate and each assumed name certificate (43 TAC 215.133). Sole proprietors and general partnerships file assumed names with the county clerk, other entities with the Secretary of State (TxDMV user guide).
- Find a location that can meet the premises rule, and confirm zoning before you sign the lease. The office must be in a permanent building open to the public, never a residence or virtual office (43 TAC 215.140). TxDMV accepts a two-year lease, or one year with an option to renew for a second (Form LG100). See what to ask the city.
- Get the city’s paper. TxDMV needs a certificate of occupancy or other official proof that the site meets municipal rules, including zoning, for a vehicle business. It must be in your name or the business’s and cover motor vehicle sales. Offices and fees by city are in the local approvals guide.
- Set up the office, the sign, the phone and the posted hours. You need a desk, two chairs, internet, a phone listed in the business name, locked plate storage, and a sign with legible letters at least 6 inches high. Open at least 4 days a week, 4 consecutive hours a day, not by appointment only, with a “be back” sign when nobody is there.
- Take the 6-hour pre-licensing course. One owner or operating manager takes it online, once, for no more than $150. TxDMV lists the approved providers.
- Buy the $50,000 dealer bond. This surety bond covers unpaid bank drafts for vehicles you buy and failures to pass good title. It runs from the first day of a month to the last day of the month two years later, in the legal business name the GDN will carry, with your physical address (43 TAC 215.137).
- Take the photos and gather the documents. Six photos (sign, building, display space, office, plate storage, posted hours), the deed or lease, a current ID for each person and a notarized premises affidavit.
- Apply in eLICENSING and pay the fees. The fee is $700 per GDN category. Metal dealer plates are $90 each and dealer temporary plates $10 each (TxDMV: dealer plates). Pay from an account held by the applicant (or its attorney or CPA), or TxDMV withdraws the application.
- Get fingerprinted when TxDMV tells you. This applies to every GDN applicant: owners and the people acting for the business, such as officers, directors, managers and partners. Wait for TxDMV’s email naming who must be printed, then use IdentoGO: $40 plus service fees as of October 1, 2026 (TxDMV: fingerprinting).
- Pass the review. TxDMV may schedule a site visit. Answer any deficiency notice within 20 calendar days or the application is treated as withdrawn (43 TAC 215.83, as amended).
- Once licensed: webDEALER, plates, county accounts and the first inventory tax declaration. Each user finishes TxDMV’s webDEALER training before the county tax assessor-collector grants access, and buyer’s plates are ordered in TxDMV’s Inventory Management System. TxDMV’s startup sheet puts the county steps within 30 days of the license’s active date (Form LP801). The first inventory tax declaration is due within 30 days of starting business.
- If you will finance or assign contracts: the OCCC license, plus the Comptroller’s permit if you carry the notes. Apply to the OCCC through NMLS; it generally has up to 60 days to review (OCCC licensing). The license must be in place before your first financed sale, including a contract you sign as the seller and assign. If you finance sales yourself, apply for the Seller-Financed Sales Tax Permit on Form AP-169 at the same time. Details: Financing your own sales in Texas.
What does it cost to start a car dealership in Texas?
State fees are fixed. Most other costs are quoted by private companies or set by your city.
| Item | Cost | Who sets it |
|---|---|---|
| GDN application | $700 per category for 2 years ($500 for the first year, $200 for the second) | State law |
| Metal dealer plates | $90 each; 2 for a new independent dealer | TxDMV |
| Dealer temporary plates | $10 each; up to 25 in a new independent dealer’s first term | TxDMV |
| GDN renewal | $400 every 2 years | State law |
| Pre-licensing course | No more than $150 | The provider, under the rule’s cap |
| Fingerprints | $40 plus service fees | TxDMV’s vendor |
| Dealer bond premium | Quoted by the surety | The surety |
| Certificate of occupancy and permits | Varies | Your city |
| OCCC license, if you finance or assign contracts | $200, $460 and $120 fees on OCCC’s checklist updated June 4, 2026, paid through NMLS | OCCC |
The GDN application rule lists no insurance policy among the required documents, but a landlord or lender may set its own requirement. The lease and the inventory will cost more than any line above.
How long does it take to get a Texas dealer license?
TxDMV reported an average of 84 days to process a new GDN application in fiscal year 2025 (September 2024 to August 2025), against its own target of 30 days. That is a reported average, not a promise: TxDMV’s checklist says processing times vary with application volume, and the city’s approval, the course and the bond all come before you apply.
What do you have to do in your first 90 days?
Your first sales start several deadlines at once.
- Plates at the point of sale. Older materials still describe paper buyer’s tags; since July 1, 2025 you issue a metal plate at the sale, file through TxDMV’s webDEALER and ePLATE systems, and charge the buyer the $10 plate fee (43 TAC 215.155). Without a webDEALER account you cannot complete a sale. See After the sale in Texas.
- The title deadline. Texas gives a dealer 30 days from the sale date to file title and registration (45 if you financed the sale yourself) (43 TAC 215.144). TxDMV tells new dealers to file within 20 business days, which is also when the Tax Code says the sales tax is due. Treat 20 business days as your working deadline and 30 days as the limit.
- Sales tax. The buyer owes 6.25 percent of the total consideration. On cash and outside-lender sales you collect it and send it to the county with the title application.
- The inventory tax. Vehicle Inventory Tax (VIT), which most county tax offices and the pre-licensing course call special inventory tax (SIT), has two filings (Comptroller: VIT). Your first declaration is due within 30 days of starting business. The monthly statement is due by the 10th of every month, even with no sales. See Texas Vehicle Inventory Tax.
- Records. Keep a deal jacket, the per-sale file, for 48 months, the last 13 at the licensed location. Since October 29, 2026 it must hold your copy of the buyer’s license plate receipt.
- The five-sales minimum. TxDMV may cancel a GDN held at least 12 months if the dealer assigned fewer than five vehicles in the previous 12 months (Transportation Code 503.038).
- Inspections. TxDMV’s Dealer Compliance Services Section checks plate and premises compliance. See Who can inspect a Texas dealership.
Your first January brings the annual inventory tax declaration, due by February 1 (file by January 31 to be safe). The Texas dealer year-end checklist lists it with the other dates.
What trips people up
- Signing the lease before the city says yes. TxDMV requires the city’s proof with the application, so a lease on a site the city will not approve is money lost.
- Getting fingerprinted before TxDMV’s email. TxDMV tells applicants not to go to the vendor until it confirms who must be printed.
- A bond that does not match. A wrong name or address, the wrong term and missing signatures are common deficiencies on TxDMV’s checklist.
- Assuming outside financing needs no OCCC license. Signing the contract as the seller is enough. Getting the license after it was required costs a $10,000 late filing fee (Finance Code 349.303).
- Selling on both Saturday and Sunday. State law bars selling or offering a vehicle on consecutive Saturday and Sunday (Transportation Code 728.002).
- Skipping the inventory tax statement in a month with no sales. A late statement costs $500 for each month or part of a month.
What changed recently
- November 1, 2026. Bexar County joined the emissions testing counties, making 18 (TxDMV).
- October 29, 2026. Amended TxDMV rules let the sign be affixed or etched on an exterior window, wall or door, and replace the barrier around a shared display area with permanent signage (Texas Register). TxDMV’s premises checklist LF628 (Rev 08/25) still shows the barrier.
- 2026. OCCC applications moved to NMLS, and the OCCC license now runs January 1 to December 31, renewed November 1 to December 31 (OCCC rule adoption). Older materials still give October 31. See Texas OCCC license renewal.
- July 1, 2025. HB 718 replaced paper buyer’s tags with metal plates and made webDEALER mandatory.
- January 1, 2025. Non-commercial vehicles no longer need a safety inspection to register (TxDMV).
Frequently asked questions
How many cars can you sell in Texas without a dealer license?
Under the main exemption, fewer than five vehicles of the same type in a calendar year, and only vehicles owned and registered in your own name. Past that, you generally need a GDN. Dealing without one is a misdemeanor with a fine of $50 to $5,000. The full rule is in What is a GDN?
How long does it take to get a dealer license in Texas?
TxDMV reported an average of 84 days to process a new GDN application in fiscal year 2025, against a 30-day target, and says times vary with application volume. The city’s approval, the course and the bond come before you apply, so start with the city.
Can I run a car dealership from my house in Texas?
No. TxDMV’s premises rule bars a dealer’s office in a residence, apartment, hotel, motel or rooming house, and bars virtual or subscription offices. You need an office open to the public with at least 100 square feet of floor space and a 7-foot ceiling, plus a display area for five vehicles.
Do I need a separate license to finance my own customers?
Yes. A dealer that finances its own sales needs a motor vehicle sales finance license from the OCCC, even at zero interest, and the Comptroller’s Seller-Financed Sales Tax Permit. Signing finance contracts as the seller and assigning them to a lender also requires the OCCC license.
Does every employee have to take the pre-licensing course?
No. One owner or operating manager listed on the application takes the 6-hour online course, once. If that person leaves, a new owner or operating manager must complete it before the next license renewal. Wholesale dealers are not required to take it.
Your next step
Get the one-page Texas dealer license checklist: every form, fee and office from this guide in the order you will need them, sent to your inbox.
When your application is in, you can set up your lot in LeftLane or book a LeftLane demo while you wait. LeftLane is a dealer management system for independent and buy-here-pay-here dealers, and real people answer the phone at 512-222-9549 if you get stuck.
Sources
- TxDMV: Dealers, independent GDN, dealer education, fingerprinting, dealer license plates and HB 718
- TxDMV: eLICENSING user guide and new GDN user guide
- TxDMV: Form LG100 and Form LP801
- TxDMV: Chapter 215 rule adoption, effective October 29, 2026 and Texas Register, October 23, 2026
- TxDMV: FY 2025 Chairman’s Annual Report
- TxDMV: register your vehicle and Bexar County emissions notice
- 43 TAC 215.133, 215.137, 215.140, 215.144, 215.155, 215.161 and 217.74
- Texas statutes: Transportation Code Chapter 503, Chapter 728, Tax Code Chapter 152, Tax Code Chapter 23 and Finance Code Chapter 349
- Texas Comptroller: Vehicle Inventory Tax, seller-financed sales and motor vehicle tax forms
- OCCC: motor vehicle sales finance, licensing, company license checklist, June 4, 2026, Bulletin B23-1 and license term adoption
This guide is general information for dealers, not legal advice. Rules and fees change. Confirm with the agency or a licensed attorney in your state before you act.