Q&A for How to Become a Wholesale Car Dealer in California

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When a CA wholesale dealer buys a car for inventory, what forms are needed at the DMV?

Community Answer

Sales of wholesale vehicles must be reported on a Wholesale Report of Sale (REG 396) with the California DMV. Wholesale vehicles sold at auction must be reported on an Auction Wholesale Report of Sale (REG 398). These forms can be obtained from the DMV's Occupational Licensing Section.

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Question

Once a dealer is no longer in business, how long is he required to keep records?

Keith McCrone

Community Answer

The California Code of Regulations (CCR) Title 13 §§272.00 requires dealers to retain all business records relating to vehicle transactions for not less than three years.

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Question

How many cars can a wholesaler buy and sell in a year?

Keith McCrone

Community Answer

There is no limit to how many vehicles can be bought or sold in a year, provided they are dealer-to-dealer transactions. Wholesale dealers are not allowed to sell even a single vehicle to a private party.

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What sort of liability vehicle insurance do I need to cover the vehicles while in my possession?

Community Answer

Garage keepers liability insurance/surety bond. You can acquire both by googling "garage keepers insurance in [your location]."

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Question

How much space do I need to store my cars?

Keith McCrone

Community Answer

Currently, California dealers are required to have a "display area" that can hold two or more vehicles. The display area can be dedicated parking spaces or indoors.

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Question

How much are insurance bonds?

Community Answer

The state of California requires wholesale dealer to have a surety bond, which acts as a guarantee that you will follow state laws when buying and selling vehicles. As a wholesale dealer, you will need a $10,000 bond. Your cost will be a percentage of this value, which will be usually be calculated based on you credit history. For example, an applicant to a bond agency with good credit (FICO 680 +) might get bonded for as low $100, where one with worse credit (below 600) might pay more than $300.

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Question

What is the cost to obtain a wholesale dealer license?

Community Answer

The fee is $176.

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What kind of license do I need if I want to buy truck engines and parts to be solely exported overseas?

Community Answer

You can buy engine parts as private party as long as you pay state sales tax. Otherwise, any home business license and registration with board of equalization will do. Do note, if you get a business license, your local city might not let you store the engine parts at home, so you might need a separate warehouse / storage for that.

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Question

Does a wholesale auto dealer need a business account, or is a normal bank account sufficient?

Community Answer

You need to have a business account. A normal bank account is not sufficient.

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