How to get a used car dealer license in Texas
A practical walkthrough of the General Distinguishing Number (GDN) application — fees, bond, timeline, and what to expect at each step. Verified against the official agency as of September 2026.
Getting a General Distinguishing Number (GDN) used-car dealer license in Texas:
- Surety bond required
- $50,000
- Application fee
- $700 (covers the 2-year license term)
- License term
- 2 years
- Typical timeline
- 4 – 8 weeks from application to approval
- Typical first-year cost
- $1,700 – $3,000
This guide is informational and does not replace official Texas requirements. Always verify with Texas Department of Motor Vehicles (TxDMV) before applying.
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Who can apply for a General Distinguishing Number (GDN) license
A General Distinguishing Number (GDN) is Texas's dealer license for independent used-vehicle retailers. It is issued by the Texas Department of Motor Vehicles (TxDMV) and required before you can buy, sell, or exchange used motor vehicles in the state for profit.
In Texas this is also commonly called an auto dealer license, car dealer license, or motor vehicle dealer license — all the same General Distinguishing Number (GDN) authority to sell used vehicles.
- An established place of business in Texas (physical lot — not a residence, apartment or hotel)
- Display space for at least five vehicles, and local zoning that allows vehicle sales
- A permanent, permanently mounted sign with letters at least 6 inches high, easily visible within 100 feet of the office entrance (banners don't count)
- An office in a building with a permanent roof and exterior walls, open to the public at least 4 days a week for at least 4 consecutive hours a day, with the hours posted
- Passing TxDMV's fitness review — it weighs criminal history and any past license discipline in any state, with no fixed look-back period, so disclose everything
- Texas sales and use tax permit from the State Comptroller
- Federal Employer Identification Number (EIN)
- Proof of liability insurance meeting TxDMV minimums
Step-by-step process
- 1
Secure a compliant business location
Texas requires a fixed lot — no online-only or pop-up operations. The lot needs a permanently mounted sign with your business name in letters at least 6 inches high, an office in an enclosed building with a permanent roof, and display space for at least five vehicles. You must also keep posted hours — at least 4 days a week, 4 consecutive hours a day. Confirm the parcel is zoned for motor-vehicle sales with your city or county before signing a lease. A certificate of occupancy or zoning letter will be needed during inspection.
- 2
Form your business entity and obtain tax registrations
Register your LLC or corporation with the Texas Secretary of State (or operate as a sole proprietor DBA). Obtain a Federal EIN from the IRS (free, 10 minutes at irs.gov). Then register for a Texas Sales and Use Tax Permit through the State Comptroller's eSystems portal — you must collect and remit sales tax on vehicle sales.
- 3
Obtain a $50,000 surety bond
TxDMV requires a $50,000 surety bond for new and renewing independent GDN applications (it was $25,000 before September 2021). The bond runs for the full 2-year license term and protects the people who do business with you. TxDMV will not accept a bond that names TxDMV as obligee. You pay a premium set by your credit — roughly 1–3% of the face value, or $500–$1,500, for most applicants. Use a Texas-licensed surety company.
- 4
Complete required dealer training
New independent GDN applicants must complete a six-hour online dealer education course, taken once by an owner or manager. TxDMV-approved courses are offered by Texas colleges and universities and by Texas motor vehicle trade associations. Keep your completion certificate — you'll upload it in eLICENSING with your application.
- 5
Submit the GDN application via eLICENSING
Create an account on TxDMV's eLICENSING portal and complete the GDN application. Upload your surety bond, proof of insurance, training certificate, and business registration documents. Pay the $700 application fee by credit card or ACH. Applications are typically assigned to an examiner within two weeks.
- 6
Pass the TxDMV lot inspection
After your application is reviewed, a TxDMV examiner will schedule an in-person inspection of your lot. They verify signage, office space, display area, and compliance with the 5-vehicle display requirement. Most first-time dealers pass if they've read the requirements carefully. Address any deficiencies promptly to avoid re-inspection delays.
- 7
Receive your GDN and order dealer plates
Once approved, you receive your GDN and can order metal dealer plates through eLICENSING at $90 each; they run on the same 2-year term as your license. Since HB 718 took effect on July 1, 2025, you issue buyers a metal plate at the sale instead of a paper buyer's tag. Your GDN number appears on all title applications and contracts going forward.
Texas dealer license cost — fees breakdown
| Item | Amount |
|---|---|
GDN application fee Covers the 2-year license term | $700 |
Surety bond premium (est.) On the $50,000 bond, by credit | $500 – $1,500/yr |
Pre-licensing course | $50 – $150 |
Dealer plates (each) Per metal plate, for the 2-year term | $90 |
Business formation (LLC) Texas SOS filing fee | $300 |
Sales tax permit | Free |
The Texas auto dealer bond: $50,000
Texas requires every used-vehicle dealer to post a $50,000 surety bond. The bond protects buyers from misconduct (odometer fraud, undisclosed liens, deceptive trade practices) and the state from unpaid taxes.
You don't pay the full bond amount up front — you pay an annual premium to a surety company, typically $500 – $1,500 per year of the bond's face value. Your actual premium depends on personal credit and business history.
Texas raised the independent GDN bond from $25,000 to $50,000 for applications filed on or after September 1, 2021. The bond covers the full 2-year license term and protects the people who do business with you — TxDMV won't accept a rider naming TxDMV as obligee. Choose a surety licensed in Texas; many national carriers are available online.
Renewal
The GDN is a 2-year license. Renew online through eLICENSING before it expires: pay the $700 fee for the next 2-year term and upload a bond that covers it. TxDMV must receive the renewal before your expiration date, so file early. You cannot sell vehicles while your license is lapsed.
Common questions
Can I sell cars from home in Texas?+
No. Texas requires an established place of business that is commercially zoned for vehicle sales. A residential address — even with a detached garage — does not qualify. You need a separate lot or commercial property.
How many cars can I sell without a dealer license in Texas?+
Fewer than five of the same type in a calendar year. Texas excludes you from the dealer definition only if you sell fewer than five vehicles of the same type in a calendar year, all owned and registered in your own name. Past that you need a GDN. Violating the dealer law is a misdemeanor with a fine of $50 to $5,000 (a court can triple it for a willful violation), and TxDMV can add civil penalties on top.
Do I need a separate license for wholesale-only sales?+
Yes. If you only buy and sell dealer-to-dealer (wholesale), Texas still requires a GDN — specifically the 'Independent Motor Vehicle Dealer' GDN that covers wholesale transactions. Retail and wholesale are covered under the same GDN type for independent used-car dealers.
What insurance does Texas require for a dealer?+
TxDMV requires dealers to maintain a dealer bond ($50,000) and general liability coverage adequate for their operations. Texas does not set a minimum dollar amount for general liability, but most lenders and auction houses require $1M/$2M. You'll also need garage liability if customers drive vehicles on your lot.
Can I use a DMS to file Texas eTitles?+
Texas uses webDEALER, a TxDMV portal that handles electronic title transfers. Most modern DMS platforms (including DealerVLO) can generate the required title paperwork, but webDEALER access requires your GDN credentials. Once licensed, you log into webDEALER directly to submit title applications electronically.
How long does the GDN process take?+
Budget 4–8 weeks from submitting a complete application to receiving your license. The biggest delay is usually scheduling the lot inspection. Submit early — TxDMV examiners in major metros (DFW, Houston, San Antonio) can be booked 3–5 weeks out.
How much does a Texas dealer license cost?+
Plan for about $1,700 – $3,000 in the first year. That covers the $700 (covers the 2-year license term) application fee and the $50,000 surety bond — you pay an annual premium of roughly $500 – $1,500 per year of the bond, not the full amount — plus business-formation, facility, and dealer-plate costs. See the full fees breakdown above.
How do I get dealer plates in Texas?+
Dealer plates are separate from the license itself. Once your General Distinguishing Number (GDN) license is approved, you apply for dealer plates and pay a per-plate fee (listed in the fees breakdown above). You can't obtain dealer plates before the license is issued.
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