How To Become a Used Automobile Dealer

Studies show that the largest retail industry in the US today is the used car industry that includes Nissan and Chevy dealers. The number of used car dealers outnumbers new car dealerships. There are specific requirements and regulations to comply with for you to become a used automobile dealer and get into used car sales.

Since experience is still the best teacher, it would be an advantage if you have had experience in the used car retail industry or a wholesale dealership before starting your own company. Having worked in a dealership environment, you would have the hands on experience needed in a dealership business in California or any location.

Here are some steps to guide you to become a used automobile dealer:

1. First establish if you want to be a sole proprietor, a partner, and an incorporator or have a limited liability corporation.

2. Decide on your place of business. Zoning in the local county or city that allows a car dealership is oftentimes the most difficult challenge for those starting a retail car dealership.

3. Since the requirements for a car dealership may vary per state, contact your state Department of Motor Vehicles, or independent Automobile Dealers Association to confirm the requirements for basic training or education, exams to pass, proof of zoning, inspections required, surety bond, and dealership licenses needed.

4. Develop a business plan to determine the resources you need to set up your dealership, the capital needed and expenses to be incurred. Gather information regarding the standards, requirements and regulations to follow, including how to network in the area. Estimate your projected profits.

5. Follow the steps to register as a used car automobile dealer. If you are from California, the following steps can help you:

  • Contact the California Department of Motor Vehicles (DMV), and register to attend the required 6-hour preparation class.
  • Complete the preparation class and take the 40-question exam you need to pass.
  • Submit your completed DMV car dealer application together with your zoning approval letter, a copy of your OL902 Class Completion Certificate, your TSM888 business license, your resale permit, a fictitious name statement, a copy of your telephone listing, your Livescan fingerprint card, and the completed personal history questionnaire.
  • Submit the pictures required for a DMV on-site inspection approval. These include: the building facade, the display area, the outside sign, inside signs, the office, the telephone, a locked cabinet, the company checkbook, a DMV dealer book, a copy of the business license and the resale permit.
  • Pay the required bond in the name of the owner or dealership.
  • Wait for the approval or rejection of your temporary license from the DMV inspector assigned to review your application. Temporary licenses are usually granted within 30 days, while the permanent licenses are granted usually within 120 days.

6. Set up your network by joining local business groups like the Toast Masters, your local chamber of commerce, and other associations related to used car sales or used auto dealer or car dealerships in your location. Try joining wholesale car dealers associations or international organizations as well for wider networking.

Dedication and hard work are needed to become a used car or automobile dealer, but it is not that difficult to start. All you need are determination and interest to grow the business.


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