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 June 2026.
Getting a General Distinguishing Number (GDN) used-car dealer license in Texas:
- Surety bond required
- $25,000
- Application fee
- $700 (independent used-vehicle dealer)
- License term
- Annual — expires on a calendar-year or anniversary basis
- Typical timeline
- 4 – 8 weeks from application to approval
- Typical first-year cost
- $1,100 – $2,000
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.
- 18 years of age or older
- An established place of business in Texas (physical lot — not a home address)
- Lot must display at least five vehicles; have a permanent sign visible from the street; and meet local zoning for vehicle sales
- Designated office space on the lot with a working phone line
- No dealer-license revocation in any state within the past 5 years
- 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 must have a permanently affixed sign with your business name, an enclosed office, and enough display space for at least five vehicles. 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 $25,000 surety bond
TxDMV requires a $25,000 surety bond naming the State of Texas as obligee. Annual premiums run $150–$400 depending on your credit. Use a Texas-licensed surety company. The bond must remain in force for the life of your license and be renewed annually.
- 4
Complete required dealer training
Texas requires all new applicants to complete a six-hour pre-licensing education course from a TxDMV-approved provider. The course covers Texas dealer law, titling, odometer disclosure, and consumer protection rules. Keep your completion certificate — you'll upload it 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 plates and dealer tags
Once approved, TxDMV mails your GDN certificate and dealer plates. You may purchase up to 20 buyer's tags initially. Your GDN number appears on all title applications and contracts going forward. Post your license in the office where customers can see it.
Texas dealer license cost — fees breakdown
| Item | Amount |
|---|---|
GDN application fee Per license year | $700 |
Surety bond premium (est.) Good credit ~$150/yr | $150 – $400 |
Pre-licensing course | $50 – $150 |
Dealer plates (each) Per plate | $25 – $40 |
Business formation (LLC) Texas SOS filing fee | $300 |
Sales tax permit | Free |
Surety bond requirement
Texas requires every used-vehicle dealer to post a $25,000 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 $150 – $400 per yearof the bond's face value. Your actual premium depends on personal credit and business history.
Texas requires a continuous $25,000 bond. If a claim is paid out, you must restore the bond to full face value or your GDN will be suspended. Choose a surety licensed in Texas; many national carriers (Zurich, Merchants, Philadelphia) are available online.
Renewal
GDN licenses renew annually. TxDMV sends a renewal notice 60 days before expiration. Renew online via eLICENSING, pay the $700 renewal fee, and upload an updated bond certificate. Failure to renew on time results in a lapse — you cannot sell vehicles during a lapse and must apply as a new applicant if your license lapses for more than 90 days.
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?+
Texas law presumes dealer activity if you sell more than four vehicles in any 12-month period. Selling five or more vehicles per year without a GDN is a Class A misdemeanor. If you're already at three, get licensed before you sell another.
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 ($25,000) 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 $1,100 – $2,000 in the first year. That covers the $700 (independent used-vehicle dealer) application fee and the $25,000 surety bond — you pay an annual premium of roughly $150 – $400 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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