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I want to buy a car from an auction and want to know first if I need a license, and second, how to get a dealer’s license.

4 Comments »

1. 

   At the auction, you probably need to register as a bidder, and pay a fee to get the privilege to bid. Check with the auction company.
   Check with the city government about the dealer’s license, but that may be state issued. The city will also issue the tax permit for sales tax.

   Comment by Steven P nb tx — December 16, 2009 @ 1:49 pm

2. 

   The cheapest way is to get a wholesale license. Problem there is you cant sell at retail. Only to dealers and maybe to the public at auctions open to the public.

   Biggest cost for a wholesalers license is usually the mandatory garage liability insurance which can run $2500-3000 per year if you have a good driving record.

   They will let you pay that monthly for a big extra charge.

   In most states the license period is 1 year or the remainder of the year depending on when you buy it.

   My states year starts like Oct 1. or something.
   Usually, if you don’t pay your insurance they automatically notify the state which then revokes your license and nowadays most of the bigger auctions know that fairly soon. So getting insurance and then failing to pay isn’t going to keep you able to buy at auction.

   To get a retailers license in most states, you have to have a bondafide place of business, in a commercially zoned area with a sign and so forth. Most states have gotten tough on this so you often cant just rent a spot at a gas station and qualify.

   Bottom line, its just usually not worth it for someone wanting to dabble.

   Probably cheaper to try and befriend a car dealer and pay him to take you to an auction. Or buy them from individuals and sell them. I used to buy cars from individuals all the time as well as auctions.

   If you don’t know what you are doing, you CAN overpay at auction. The auctioneers & sellers can SMELL newbies and take advantage of them.

   I once bought a truck out of the newspaper for $1400. Sold it off the side of the road 3 days later for $2900 and then saw the same truck, a year later with 20,000 more miles at a dealer auction bring $2600. Plus buyers fee.

   Auctions arent a substitute for experience.

   Comment by N — December 16, 2009 @ 1:49 pm

3. 

   The dealer auctions are very strict about allowing dealers only. Before you can get an auction card which you need even to get in the door you must present copies of your dealer license, resale certificate and surety bond.

   Dealer licenses are issued by the occupational licensing section of the state DMV. You must post a bond and have an approved location. The location is the hard part because the cities are very restrictive with their zoning laws and only allow dealers in certain areas. As a result property owners usually charge outrageous rent for existing lots. You can get a wholesale license but that does not allow you to retail cars to the general public. The sales tax permit is also issued by the state by whatever agency collects sales tax.

   Comment by Steve — December 16, 2009 @ 1:49 pm

4. 

   You only need a dealer’s license if you’re planning on going to a dealer’s auction. But, if you’re just looking to buy 1 or 2 cars, your better off going to a regular public auction. Most of them are free.

   Comment by CarmelKM — December 16, 2009 @ 1:49 pm

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