Last Updated on October 7, 2022 by Bernard Juchli
How To Get A Dealer License For Car Auctions
Getting a good deal for a car is not easy. At open auctions, great opportunities exist. But they aren’t always that much. That’s because many car dealers have mastered the art of getting the best bargains through exclusive dealer auctions where the best bargains are available. To be part of that, you’ll need a dealer license. I will briefly show you how to get a dealer license for car auctions.
To get a dealer license for car auctions for individuals who aren’t car dealers, the best option is to approach the state government for one. If you wish to keep purchasing cars at dealer auctions, it is the best route. If the idea is not to keep purchasing at the auctions, various options are more appropriate, including using an auction broker.
With over ten million vehicles sold at dealer-only auctions nationwide, the first step to making a lot of money in your car business would be to be a part of the over 200 dealer auctions across the country. To make this opportunity possible for you, you need to get a dealer license for car auctions.
If you could buy used vehicles from the same “store” the big car dealer gets them from, you would, wouldn’t you?
So, to bid against the dealers, you’ll need a dealer’s license. Unfortunately, you can’t fake a dealer’s license just like you can create a fake driver’s license – you can click here to see how to create a fake driver’s license.
You would not need a dealer’s license, though, if the auction is open to the public. However, you would need to get a dealer’s license to participate in a dealer’s auction without being a car dealer.
That brings us to the different types of car auctions.
Types of Car Auctions
Not every auction requires you to have a license to participate, as you would see.
There are two main types of car auctions, although each type may take different forms. However, broadly speaking, there are two.
- Public Auctions
- Dealer Auctions
Public Auctions are so-called because they are open to the public and do not require any prerequisites. With public auctions, licenses aren’t required. Public auctions offer great deals as cars can be bought at wholesale prices.
Public auctions can be either initiated by the government or the public. Government public auctions involve government vehicles, police vehicles, or vehicles impounded by law enforcement. The interesting thing about such vehicles is that they always have competitive bidding as car dealers always find them a great deal. The other kind of public auctions is the general public auctions which involve private or corporate vehicles.
You should be very careful when bidding for vehicles at public auctions, especially when it doesn’t involve government vehicles, because you have a higher probability of being shortchanged if you’re not very watchful. But overall, it provides great deals.
This kind of auctions isn’t opened to the public. To participate, you’ll have to get a license. You don’t have to be a car dealer in the strict sense to get a dealer license. However, it is unnecessary to go through the trouble if you only wish to get a car for yourself at the auction.
There are over 250 dealer auctions in the country, which are all closed to the public. Yearly, millions of cars are sold at these auctions.
If you plan to get cars that you wish to resell, you may need to go for the dealer’s license. It’s a profitable business idea if you’re willing to learn the rudiments. All you need to do is run a few maintenance works, modify the cars, and a very handsome profit could be waiting for you.
Remember that if you don’t intend to buy more than one car or are not interested in reselling them, you don’t need to go through the stress. Just visit the nearest public auction, and be ready to bid against everyone else!
However, if you wish to battle against the dealers, then we can start from the beginning: getting a dealer license.
Getting a car dealer auction license
It is challenging to access a dealer auction without a license. However, it is worth it to have one.
Note that you can only be issued a dealer license if you meet all requirements, including having an established, open place of business.
Let’s look at the process to get a dealer license for car auctions.
Get the necessary information from your Local DMV website
You need first to visit your local department of motor vehicles website for the required information, which would vary from one state to another. However, the basics involve submitting an application and paying an application fee.
Apply for the license
Once you’ve met all the requirements, you can then apply after paying the application fee. The application involves you answering questions about your business and why you need a dealer license.
Provide required documents
This also varies from state to state. But to get a dealer license for car auctions, you are mostly required to provide a business plan, tax identification number, business license, proof of insurance, and a fingerprint card.
Show proof of surety bond.
The surety bond is insurance that is required before a dealer license is approved. The surety bond is required to prevent losses on the part of the customer if anything terrible were to happen to the dealership.
Pay required fees
These are the licensing fees that are required to qualify for a dealer license. Some states require some additional fees, including Motor Vehicle Board fees.
Once the procedure is complete and the state has found you qualified, you will get your license.
What does a dealer license offer?
The procedures listed above may look quite cumbersome and demanding. It is, however, profitable for those who can go through the process.
The most noticeable is access to lots of auctioned vehicles which would yield lots of profit. As a licensed dealer, this access is worth more than any cost or effort of getting that license.
These auctions are the stores where all car dealers buy their stock. It not only provides vehicles at great deals, but it also offers many good vehicles as well.
These great deals at prices that make them profitable are not open to those without a license. Therefore, getting one is the right step if you want to make a lot of profit selling cars.
Because of the source of cars sold at dealer-only auctions, they offer the best bargains.
Let’s look at some of the sources.
Most rental vehicles replace their fleet annually. While most of their vehicles remain in excellent condition, they often end up at the dealer auctions, offering great deals.
Many companies replace their fleet periodically. When they do, they are exclusively released to dealer-only auctions. Such vehicles also have great shelf value and have been well maintained.
They also do fetch handsome profits. Companies use dealer auctions because they do not have the luxury of time to dispose of all the cars on time. The auctions provide an easy way of selling them off.
These are vehicles that have been affected by accidents and disasters. Most times, these vehicles are offered by insurance companies.
When financial institutions lease off a vehicle and the lease expires, they are auctioned off once the lease arrangements expire.
Car dealers who are unable to sell off cars often send them to dealer auctions. Sometimes, if a substandard car ends up with a dealer, it is also auctioned.
Frequently Asked Questions about Car Auction Dealer License
What do I need to qualify and get a dealer license for car auctions?
Once you are interested, you are qualified!
You do not need to be a car dealer or sell a required number of cars. But it’s not as easy as it sounds. Depending on the state, it could be quite a demanding procedure. But it’s always worth it if you need it.
How to Purchase a Car at Auction without Dealer License.
A dealer car auction is open only to dealers with auction licenses. There are many other ways you can purchase a car at a dealer car auction without necessarily having a dealer license.
The straightforward way is to get a license. But let’s look at some smart ways of bending the rules, especially if you’re not interested in selling the cars for profit.
Look for concessions
Some dealer car auctions may offer special concessions for one-time purposes. Some may offer a license that can only be used once at a smaller fee, while others may offer access without a license for a fee. If you wish to access such auctions, you need to be sure of the rules. If you’re not a car dealer and wish to be part of a dealer auction, to get a dealer license for car auctions may be a smart route to get great deals.
Another great concession would be to allow a licensed person who is already going to the auction to bid on your behalf. Depending on arrangements, it may cost you nothing extra. If you’re not interested in participating for a long time, it may be a smart idea.
However, if you need to participate frequently at car auctions, you may need a license.