When you buy a used car from a dealer’s lot, there is a good chance that it came from a wholesale auction. To buy cars from wholesale auctions in Texas one must be a licensed dealer. Texas has a number of rules that you must follow when buying and selling cars. Individuals who buy and sell more than a few cars a year may be in violation of the law. All dealer – only car auctions in Texas require that you have a valid wholesale dealers license to bid. Here is how to go about getting the proper license to be able to buy cars at wholesale auctions in Texas.

What Does It Cost To Become A Used Car Dealer In Texas Who Can Bid At Auctions?

The first step to becoming a used car dealer in Texas is to obtain a GDN or General Distinguishing Number. This costs $500 and $200 to renew.  You will become an Independent Motor Vehicle licensee, as described below by the Texas Department Of Motor Vehicles.  You can get more info at TXDMV.

What A Texas Car Dealer License Allows You To Do

“May buy, sell, or exchange any type of used cars and trucks. May use dealer’s temporary tags, buyer’s temporary tags, and metal dealer license plates on motor vehicles only. Must provide a bond.”

The requirements to become a car dealer in Texas who can bid at auto auctions are  to have a physical lot, where they can display at least 5 cars, have proper signage, etc., and have post a bond with the state for around $25,000.  Bonds can often be obtained from insurance companies that offer general liability insurance, which you will also need for your lot.  You will also need a DBA certificate or “Doing Business As” from your county courthouse.

Why Buy Cars At Wholesale Dealer’s Auctions In Texas?

By becoming a car dealer in Texas you can have access to thousands of vehicles which sell for prices far below what the public pays. You can turn around and sell those wholesale auction purchased cars in Texas for a good profit on your lot. Though it is prohibitive for some people who don’t have a lot to become a used car dealer in Texas, it is an option for those who already have some kind of lot space that they could use to qualify.

A good resource for how to become a used car dealer is the book “Used Car Money Machine” seen below.