In order to sell used cars legally, you must obtain a dealer's license that is issued by your state. Before you decide to get your license, you should determine whether you want to sell used cars for wholesale or retail. Wholesale means you sell your used cars directly to a dealership who then sells them to the public. Selling used cars in retail means you manage your own used car lot, selling used cars directly to the public. You can obtain either a wholesale or retail dealer license or both by completing the proper paperwork.
Call your state tax office or go to your local Department of Motor Vehicles (DMV) for guidance on where to obtain your used car dealer license (see Resources). The offices that issue the licenses vary from state to state. You can also contact the National Automobile Dealers Association to determine which office you must get in touch with (see Resources).
Receive all pertinent forms for obtaining your license. The majority of states will require an instructor-led class that you must pass in order to obtain your license. For example, in California you must take a 6 hour class and pass a 40 question exam.
Complete the course and successfully pass the exam to receive your license. You must turn in your application, which will require information such as the location of your car lot and what type of used vehicles you will be selling. Some states may even require that you obtain a business license before receiving a dealer license. Turn in your application to the appropriate office and wait for it to be approved.
Receive your temporary license once your application is approved. With your temporary license you can begin building your used car dealership by ensuring that your location meets all your city's zoning regulations.
Prepare for inspection from the DMV. Prior to the inspection you must present photos of the location, such as outdoor and indoor signs, inside and outside of the office, resale permit, business license, telephone, cabinet or safe, DMV dealer book and checkbook.
Submit your zoning approval letter, business license and resale permit to the office that issued your temporary license. You will be granted your permanent license within 120 days.
