How to Get a Dealership License in Texas: GDN, Bond, and Filing

To get a dealership license in Texas, you need a General Distinguishing Number (GDN) issued by the Texas Department of Motor Vehicles. That means picking the license category that matches the vehicles you plan to sell, setting up a physical lot and office that meet state premises rules, posting a $50,000 surety bond, carrying garage liability insurance, completing a pre-licensing education course, and passing a fingerprint-based background check. Everything is filed through the TxDMV eLICENSING portal. Operating without a GDN is illegal whether you plan to sell one car a month or a hundred.¹

Most applicants spend two to four weeks in active review once they submit a complete package. The prep work beforehand is where the real time goes.

Pick the GDN Category That Matches Your Inventory

Texas splits GDN licenses into several categories, and you have to apply for each vehicle type separately if you want to sell more than one. The main options are:²

Independent Motor Vehicle — used cars, trucks, motor homes, and neighborhood vehicles, including salvage. Bond required.
Independent Motorcycle — used motorcycles, scooters, and ATVs. Bond required.
Travel Trailer — used travel trailers only. Bond-exempt.
Trailer/Semitrailer — new or used utility trailers and semitrailers. Bond-exempt.
Wholesale — sales only to other licensed dealers, never to the public. No five-vehicle display area required. Bond required.
Independent Mobility Motor Vehicle — new mobility vehicles for people with disabilities.

The independent motor vehicle license is the usual pick for someone starting a used car lot. If you want to sell new vehicles of a particular brand, a franchised dealer license sits on top of the GDN and requires a manufacturer’s franchise agreement.¹

Set Up a Compliant Location

Texas is specific about your physical setup, and premises failures are one of the most common reasons applications stall. Every retail dealership needs an established, permanent place of business at a fixed address with a dedicated office and a vehicle display area. The office has to contain, at minimum, a desk and two chairs, and it’s where you keep your records and receive customers during posted hours.³

The display area must be a hard-surfaced lot big enough to show at least five vehicles of the type you’re licensed to sell, separated from any other business operations or public parking on the property. Wholesale dealers skip the five-vehicle display requirement but still need a compliant office.²

Signage

You need a permanent sign with letters at least six inches tall showing your business name exactly as it appears on your application. It must be visible to the public within 100 feet of the main office entrance, made of durable and weather-resistant material, and permanently mounted to a building wall or a dedicated sign pole. Banners don’t count, though TxDMV may allow a temporary banner if you can show a compliant sign has been ordered.⁴

Business Hours

Retail dealers must be open at least four days per week for at least four consecutive hours each day. Appointment-only operation is not allowed. Your posted hours have to cover all seven days of the week, including the days you’re closed, and be displayed at the main office entrance.³ Wholesale dealers have a lighter schedule: two weekdays per week, two consecutive hours per day.⁴

Post the Surety Bond and Get Garage Liability Insurance

Most GDN types require a $50,000 surety bond before TxDMV will process your application. The bond protects consumers and the state against financial harm caused by violations of dealer laws.⁵ Travel trailer and trailer/semitrailer dealers are exempt.²

You don’t pay $50,000 up front. You buy the bond from a licensed surety company and pay an annual premium that depends largely on your personal credit. Applicants with strong credit often pay 1% to 3% of the bond amount annually; lower scores can push the premium significantly higher. It pays to shop multiple bonding companies. Your surety provider completes the bond form (VTR-132), which is uploaded with your application.

Separate from the bond, Texas requires licensed dealers to carry garage liability insurance with at least $85,000 in combined single-limit coverage. This is the requirement first-time applicants most often overlook. It covers claims arising from your dealership operations, including test drives and lot incidents, and premiums vary widely based on location, inventory size, and claims history.

Finish the Pre-Licensing Education Course

If you’re applying for an independent motor vehicle GDN, at least one owner or operating manager must complete a pre-licensing education course before you submit the application. For new applicants, the course runs a minimum of six hours online and cannot cost more than $150.⁶

Only one person from the business needs to take it, but that person has to be an owner or manager listed on the application. The completion certificate uploads directly into eLICENSING. Training is a one-time requirement and doesn’t repeat at renewal, but if the person who took the course leaves the business, a new owner or manager has to complete it before your next renewal.⁶

Gather Your Documents and File Through eLICENSING

The paperwork stack is substantial. Pull the following together before you touch the online portal:

Business entity filings. Your LLC, corporation, or other entity must already be registered with the Texas Secretary of State, and you’ll need the SOS filing number.
Federal Employer Identification Number (EIN) from the IRS. Free, and available immediately online.⁷
Owner and officer information: Social Security Numbers, dates of birth, driver license information, and ownership percentages for every individual owner and manager on the application.
Proof of ownership or a valid lease for the dealership premises.
Photographs of the office interior, the permanent sign, and the display lot. Uploading these with the application speeds review.
A sales tax permit from the Texas Comptroller of Public Accounts, since vehicle sales are taxable transactions.⁸

All GDN applications go through the TxDMV eLICENSING system. Register an organization account and designate at least one user as the eLICENSING administrator before you begin.⁹

Inside the portal, you’ll pick your GDN type, enter business and ownership information, provide your Secretary of State filing number, validate your physical address through the USPS lookup, and upload your supporting documents, including photos, the bond form, proof of insurance, and the education certificate. If you want metal dealer license plates for your inventory, order them during the application at $90 per plate. Application fees are paid through the portal at filing; check eLICENSING for the current fee schedule, since amounts adjust periodically.⁹

Fingerprints and Background Check

After TxDMV receives your application, the Motor Vehicle Division does an initial review. If the package is complete, the Background and Fraud Unit determines who on your application needs fingerprinting and sends an email with instructions and a TxDMV service code.¹⁰

Fingerprinting is handled through IdentoGO by IDEMIA, a third-party vendor you pay directly. Results go to TxDMV from both the Texas Department of Public Safety Crime Records Division and the FBI. Move quickly once you receive the notification; fingerprinting delays are the most common reason applications stall.¹⁰

What Can Disqualify You

You have to disclose all convictions and deferred adjudications regardless of when they occurred. For retail license types, offenses that raise red flags include fraud, theft, forgery, falsifying records, bribery, felony drug offenses, and felonies involving the manufacture, sale, or financing of motor vehicles. A conviction isn’t an automatic denial; TxDMV weighs how long ago the offense happened and how closely it relates to a dealer’s duties. Certain violent and sexual offenses are independently disqualifying with no workaround.¹¹

After You’re Approved

Once your GDN is issued, you’ll use the webDEALER and ePLATE system (formerly eTAG) to process sales. As of July 1, 2025, buyer’s temporary tags, dealer temporary tags, and internet-down temporary tags are no longer in use. Dealers issue general issue license plates directly to buyers at the point of sale, collect a $10 plate fee per buyer, and submit the title transaction through webDEALER within 30 calendar days (45 for seller-financed deals).¹²

Your GDN isn’t permanent. Texas requires periodic renewal, and every premises requirement has to stay in place for the full license term. If your sign blows down, your lease expires, or your bond lapses, you’re out of compliance. Keep the surety bond and garage liability insurance active without gaps, and update eLICENSING promptly when ownership changes, you move, or you add a supplemental location.

Federal Rules That Apply From Your First Sale

The GDN handles the state side. Federal law layers on obligations that kick in as soon as you start selling, and the penalties are steep enough to end a dealership. Plan for these before you open, not after.

The FTC’s Used Car Rule requires a Buyers Guide on every used vehicle you offer for sale if you sell more than five in a 12-month period. It has to be prominently displayed with both sides visible and must disclose whether the sale is “as is” or under warranty. Violations run up to $53,088 each.¹³

Any time you receive more than $10,000 in cash from a single transaction or related transactions, IRS Form 8300 has to be filed within 15 days, with a written statement to the buyer by January 31 of the following year. Keep copies for five years. Intentionally ignoring the rule carries a minimum $25,000 penalty and possible criminal prosecution.¹⁴

Federal law also requires you to keep every odometer disclosure statement for five years at your primary place of business, in a form that allows systematic retrieval and prevents undetected alteration.¹⁵

If you arrange financing, you’re a financial institution under the Gramm-Leach-Bliley Act. You must give customers a written privacy notice at the start of the relationship and annually thereafter, with an opt-out mechanism if you share information with nonaffiliated third parties.¹⁶ The FTC’s Disposal Rule requires you to destroy consumer report information securely when you no longer need it.¹⁷

Dealers who offer or arrange financing must also comply with the Equal Credit Opportunity Act, which bars discrimination based on race, color, religion, national origin, sex, marital status, age, or the source of an applicant’s income. Adverse actions require a written notice within 30 days explaining the specific reasons or the applicant’s right to request them.¹⁸

1
Texas Department of Motor Vehicles. Dealer License Application Process
2
Texas Department of Motor Vehicles. Independent (GDN) License
3
Cornell Law School. Texas Administrative Code 43-215.140 – Established and Permanent Place of Business Premises Requirements
4
Texas Department of Motor Vehicles. Dealership Premises Checklist
5
State of Texas. Texas Transportation Code TN-503
6
Texas Department of Motor Vehicles. Dealer Education Requirements for Licensing
7
Internal Revenue Service. Employer Identification Number
8
Texas Comptroller of Public Accounts. Sales Tax Permit Requirements
9
Texas Department of Motor Vehicles. eLICENSING User Guide for New Independent GDN Licenses
10
Texas Department of Motor Vehicles. Fingerprinting Requirements
11
Texas Department of Motor Vehicles. Criminal History Review Process
12
Texas Department of Motor Vehicles. ePLATE (Formerly eTAG) 101
13
Federal Trade Commission. Dealers Guide to the Used Car Rule
14
Internal Revenue Service. Instructions for Form 8300 Report of Cash Payments Over $10,000 Received in a Trade or Business
15
eCFR. Part 580 Odometer Disclosure Requirements
16
Federal Trade Commission. How To Comply with the Privacy of Consumer Financial Information Rule of the Gramm-Leach-Bliley Act
17
Federal Trade Commission. Disposing of Consumer Report Information Rule Tells How
18
eCFR. Part 202 – Equal Credit Opportunity Act (Regulation B)