How to Get Your License to Buy Cars at Auction
Thinking about buying cars at auction? Great deals are out there, but the rules vary. Public auctions are open to anyone, no license needed. However, dealer-only auctions offer more inventory and lower prices, and those do require a dealer’s license. Here’s what you need to know before you start bidding.
Public Auctions vs. Dealer-Only Auctions
Public Auctions – No License Required
Public car auctions are a great entry point for anyone looking to buy a vehicle at a potentially lower price. With no dealer license required, these auctions are open to the general public and feature a wide variety of vehicles, such as older, high-mileage models, government fleet cars (like retired police cruisers), bank-repossessed vehicles and even salvage cars that may need repairs. Public auctions are ideal for bargain hunters, hobbyists or those looking for a project car. Many of these auctions now offer online bidding, allowing you to participate from the comfort of your home.
Dealer-Only Auctions – License Required
Dealer-only auctions, on the other hand, are exclusive to licensed dealers and typically offer newer, lower-mileage vehicles. These include trade-ins from dealerships, off-lease cars, rental fleet vehicles and bank repossessions. Because these cars are often in better condition and have more recent model years, they tend to attract professional dealers looking to restock inventory for resale. To participate in these auctions, you’ll need a valid dealer’s license, which involves an application process, along with fees and meeting specific state requirements. While dealer-only auctions can offer great deals, accessing them requires more upfront effort and paperwork.
Do You Need a Dealer's License?
A dealer’s license is intended for individuals or businesses that buy and sell cars regularly for profit. It grants access to exclusive dealer-only auctions and allows you to legally sell multiple vehicles per year, depending on your state’s regulations.
If you’re planning to flip cars, open a lot or operate as a car dealer, you’ll need one. However, occasional buyers don’t need to worry about the extra paperwork or licensing fees. If you’re simply purchasing a vehicle for personal use, a dealer’s license isn’t required.
How to Get a Dealer's License
Getting a dealer’s license involves several steps, and the exact requirements vary by state. However, most states share a few common prerequisites.
Step 1: You’ll need to register a business name and establish a physical business location. This can’t be a home address in many states, and it typically needs to meet specific zoning and signage requirements.
Step 2: Most states require a surety bond, which acts like an insurance policy to protect consumers against fraud. The bond amount varies, often ranging from $10,000 to $50,000. You’ll also need commercial auto insurance to cover your dealership’s vehicles and any test drives.
Step 3: There are also fees associated with licensing and obtaining dealer plates, which allow you to legally drive unregistered vehicles. Some states require applicants to pass a background check, and a few mandate that you complete a pre-licensing dealer course, especially if it’s your first time applying.
Step 4: After gathering the necessary documentation and meeting all local requirements, you’ll submit your application to the state’s motor vehicle department. Processing times can vary, so it’s wise to apply well in advance if you’re planning to attend dealer-only auctions or open your dealership soon.
Always check your state’s DMV or licensing board for the most accurate information.
Challenges of Getting a Dealer's License
Getting a dealer’s license can be a rewarding step if you're serious about selling cars, but it comes with its share of challenges. One of the biggest hurdles is the cost. Surety bonds, commercial auto insurance, licensing fees and facility requirements can add up quickly. It’s not just a one-time expense either, as these costs often recur annually.
There’s also a significant amount of paperwork involved. You’ll need to keep detailed records of every sale, adhere to your state’s vehicle laws and file the necessary documents with the DMV or licensing board. Some states also require dealers to meet ongoing benchmarks, such as completing a minimum number of car sales each year to keep the license active.
The bottom line? A dealer’s license is best suited for those who plan to sell vehicles as a legitimate business. If you’re just buying for personal use or occasional flips, it may not be worth the time or cost.
Want to Buy Cars at an Auction Without a License?
Public car auctions are open to everyone, so you can bid on a wide range of vehicles without needing any special credentials. From budget-friendly sedans to trucks and even luxury cars, there’s something for every buyer. Best of all, many auctions are available online, allowing you to browse and bid from the comfort of your home. Whether you're shopping for a project car or just hunting for a great deal, public auctions make it easy to get started, with no license required!
Why Buy at an Online Auction?
Buying a car at a vehicle auction offers several advantages over traditional car shopping, including:
- Access to a huge selection of vehicles, from daily drivers to rare finds, all searchable online from the comfort of your home
- Lower prices, with many vehicles selling well below market value, making it easier to score a great deal
- A simple and convenient bidding process. Just enter your maximum bid, and the system will automatically increase your offer only as needed to stay ahead.
With affordability and all the variety, car auctions are a smart alternative to dealership shopping.
Ready to Start Bidding?
If you’re looking for an easy, hassle-free way to buy cars at auction, Capital Auto Auction is the place to start. We host public online auctions where anyone can bid with no car auction license required. You’ll find great deals on a wide selection of quality used vehicles, all from the comfort of your home. Whether you’re a first-time bidder or a seasoned buyer, our auctions make the process simple and affordable.
Have questions? Our team is here to help! Find out how to prepare for an auction. Contact us to learn how it works, then get ready to start bidding at an upcoming Capital Auto Auction event.