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Dealer License by State
Texas independent (GDN) dealer requirements
Unofficial summary – verify with TxDMV

Texas Independent (GDN) Dealer License Requirements – 2025 Overview

In Texas, most used‑vehicle dealers operate under an Independent Motor Vehicle General Distinguishing Number (GDN) issued by the Texas Department of Motor Vehicles (TxDMV). This page summarizes the core requirements and typical steps for opening an independent used‑car dealership in Texas.

Important: This is an informational overview, not legal advice. Forms, fees, and rules change. Always confirm details directly with TxDMV before you apply.

1. Who regulates dealers in Texas?

Texas motor vehicle dealers are regulated by the Texas Department of Motor Vehicles (TxDMV). The Motor Vehicle Division issues GDN licenses, reviews applications, and enforces dealer laws.

2. Texas dealer license types (GDN categories)

A General Distinguishing Number (GDN) is the basic Texas dealer license. When you apply, you select one or more license categories based on the type of vehicles you will sell. Common independent categories include:

  • Independent Motor Vehicle (used‑car) dealer – retail sales of used motor vehicles.
  • Wholesale dealer – sales only to other licensed dealers; no retail sales to the public.
  • Motorcycle, travel trailer, trailer, and other specialty GDNs – for specific vehicle types.

Many independent used‑car lots start with an Independent Motor Vehicle GDN. You may hold multiple GDN categories if your business model requires it.

3. Business location and premises requirements

To qualify for a GDN, your dealership must have a permanent business location that meets both local zoning rules and TxDMV minimum standards. Expect to show that:

  • You have a physical business address in Texas (no P.O. box as the business location).
  • The property is correctly zoned for motor vehicle sales; many cities require a zoning letter or certificate of occupancy.
  • There is an enclosed office where you can conduct business and store records.
  • You maintain a display area large enough for at least one vehicle offered for sale.
  • You have a permanent sign with the dealership name, visible from the nearest roadway, meeting TxDMV size and mounting rules.
  • Your business hours are posted and the public can access the location during those hours.

TxDMV may use a premises checklist and can conduct inspections to verify that your location meets all minimum requirements.

4. Core prerequisites for an independent GDN

Before you submit your application in TxDMV’s eLICENSING system, you should have these items in place:

4.1 Business entity and tax registration

  • Form your business entity (sole proprietor, partnership, LLC, or corporation).
  • Register your entity and assumed names with the Texas Secretary of State or county clerk, as applicable.
  • Obtain a Federal Employer Identification Number (FEIN) from the IRS.
  • Register with the Texas Comptroller for any required sales and use tax accounts.

4.2 Surety bond and insurance

  • Obtain the required Texas motor vehicle dealer surety bond for your license type (bond amounts can vary, so confirm current requirements with TxDMV).
  • Maintain garage liability or comparable commercial liability coverage that meets any minimum standards set by your lender, landlord, or state rules.

4.3 Dealer education (for many first‑time applicants)

  • Many new independent GDN applicants must complete an approved Texas dealer education course before applying.
  • The course is commonly a 6‑hour class focused on Texas dealer law, forms, and compliance.

4.4 Background checks and fingerprints

  • Owners and key individuals may be subject to background checks as part of the licensing process.
  • Be prepared to disclose criminal history, prior license actions, or disciplinary issues if applicable.

5. Application process in TxDMV eLICENSING

Texas uses an online system called eLICENSING for dealer applications, renewals, and updates. A typical process for an independent GDN looks like this:

  1. Create a TxDMV eLICENSING account and select the appropriate GDN license type.
  2. Enter your business entity information, ownership details, and contact information.
  3. Upload supporting documents, such as your premises photos, sign photos, entity documents, and zoning verification.
  4. Provide evidence of your dealer surety bond and insurance.
  5. Upload any required education certificates and background documentation.
  6. Pay the applicable license and plate fees through the portal.
  7. Respond to any TxDMV requests for additional information or corrections.

TxDMV will review your application and may conduct an inspection before approving your GDN.

6. After approval: ongoing compliance in Texas

Once your GDN is approved, you must continue to meet Texas dealer obligations, including:

  • Maintaining your business location, sign, bond, insurance, and records in compliance.
  • Renewing your GDN before it expires and keeping information in eLICENSING up to date.
  • Using the webDEALER system for electronic title and registration processing, as required by TxDMV.
  • Following all rules on temporary tags, advertising, odometer disclosures, and titling.

Review TxDMV dealer training materials and bulletins regularly to stay current on any law or rule changes.