There are three ways to can buy and sell cars in California. You can operate as a wholesaler, who purchases cars from auctions and sells them to car dealers. You can operate as a retailer, who buys cars from auctions and dealers and sells...
Method 1 of 7:
Getting Started
Decide if you need a license. If you're just selling your own used car you don't need a license. However, if you're going to be buying and selling cars for the purpose of making a profit, you'll need a license from the DMV. Selling cars for profit without a license in CA is illegal. This activity is called 'curbstoning' and can involved hefty fines if you're caught.[1]
Decide if you want to be a wholesale dealer or a retail dealer. The main distinctions are whether you will be selling cars directly to the public and whether you need to have retail space. The same paperwork is required for obtaining a wholesale dealer license or a retail dealer license.[3]
Decide if you want to add an auto broker endorsement to your license. An auto-broker endorsement allows you act as a middleman between buyers and sellers. You can add an auto-broker endorsement to either a wholesale dealer license or a retail dealer license.[6]Method 3 of 7:
Setting Up Your Business
Create a fictitious business name. Unless you'll be doing business under your own name, you need to create and register a name for your business. Go to your local County Recorder's office to file the paperwork. The fee is $100.[15]
Apply for a business license. Go to your local Town Hall and ask to speak with the tax and license division. Using your own name or the fictitious business name you created, register your business with the city.
Get a surety bond. Find a bonding company in California and purchase the required $50,000 surety bond.[17]Method 4 of 7:
Setting Up to Be a Wholesale Dealer
Decide if you want to work out of your home or another space. A wholesale dealership can be run entirely from your home. However, if you don't have space for an office in your home you'll need to lease or purchase a space.
Set up an office. Remember, it's OK for it to be a home office.[19]
Obtain a copy of your lease. You'll need a copy of your lease if you rent your office. If you own your office, a copy of your mortgage is required.[21]
Method 5 of 7:
Setting Up to Be a Retail Dealer
Set up an office. It's OK for it to be a home office. However, since you also need a retail space to be a retail dealer, it makes more sense for the office and retail space to be in the same location.[22]
Get a sign that is at least two square feet. Since you'll be selling to the public, the DMV requires you to have a sign that advertises yourself as a car dealer.[23]
Have a space that is big enough for at least two cars. Since you're going to be selling cars directly to the public, you need a space to keep the cars. The DMV requires you to have enough space for at least two cars, but of course you can have much more space than that.[24]
Obtain a copy of your lease. You'll need a copy of your lease if you rent your space. If you own your space, a copy of your mortgage is required.[25]
Method 6 of 7:
Setting Up to Be An Auto Broker
Obtain either a wholesale dealer license or a retail dealer license. An auto broker endorsement is an add-on to your license, so you need a license before you can become a broker.[26]
Set up an office. If you're adding the broker endorsement to your wholesale dealer license you can use a home office.[27]
Get a sign that is at least two square feet. If you're adding the broker endorsement to your retail dealer license, you'll need a retail space that can fit at least two cars.[28]
Kareem WintersUpdate 24 March 2020
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