Auto Broker vs. Dealer License California (2025)

Why This Page Matters

Every week, hundreds of Californians search for “auto broker license California” — and many get stuck because there’s no clear explanation that the auto broker is not a separate license, but an endorsement added to a retail dealer license. This guide clears up the confusion once and for all.

What’s the Difference Between an Auto Broker and an Auto Dealer?

Auto Dealer (Retail License)

A retail dealer license authorizes you to:

Buy and sell vehicles directly to the public or other dealers
Operate a physical dealership location with signage and posted hours
Offer test drives, financing, and service contracts
Display and advertise vehicles for sale

Your focus: Owning inventory and managing in-person sales.

Auto Broker (Endorsement to a Retail License)

An auto broker endorsement allows you to:

Arrange or negotiate sales or leases of vehicles for a consumer
Act as a “middleman” or concierge — finding and securing vehicles for clients
Earn a broker fee or service charge for your work (must be disclosed in writing)
Source vehicles through auctions, partner dealers, or manufacturers

Important: You cannot hold only a “broker license” in California — it must be attached to a retail dealer license issued by the DMV.

Quick Reference — Auto Broker vs. Auto Dealer (California)

Feature	Retail Dealer License	Auto Broker Endorsement
License Type	Primary DMV License	Add-on Endorsement
Can Sell to the Public	Yes	Yes, as an arranger
Must Maintain a Lot	Yes (zoned display area)	Same as dealer license
Can Broker Vehicles for Clients	Only with Broker Endorsement	Core Function
Inventory Required	Optional but typical	Usually no
Fee Structure	Profit on vehicle sale	Broker service fee
Required Course	DMV-approved Pre-Licensing	Same Pre-Licensing course
DMV Inspection	Required	Required
Bond & Insurance	$50,000 Bond + Garage Liability	Same as dealer
Application Path	Original Retail Dealer License	Dealer License + Broker Endorsement

How the Auto Broker Endorsement Works

Think of your dealer license as the foundation and the broker endorsement as the add-on capability.

Obtain a Retail Dealer License: Complete your pre-licensing course, form your entity, and pass the DMV inspection. Learn how.
Apply for the Auto Broker Endorsement: Submit additional paperwork to the DMV Occupational Licensing Division showing your existing dealer license in good standing.
Update Your Compliance Documents: Add a broker disclosure form, broker agreement, and fee disclosure to your dealership’s standard forms.
Activate Your Broker Services: You can now legally source vehicles for clients, handle paperwork, and charge a broker fee.
Stay Compliant: Keep records for all brokered transactions, clearly disclose fees, and avoid misleading advertising.

Why California Treats the Auto Broker as an Endorsement

The DMV views brokering as a sales activity, not a separate occupation. Because the broker’s function still involves the sale or lease of vehicles, you need the same infrastructure and oversight that dealers maintain — including a compliant location, signage, and records system.

When to Choose Each Path

When to Choose the Dealer License Only

You should operate as a retail dealer without the broker endorsement if you:

Intend to display, advertise, and sell vehicles directly from your lot
Prefer to earn revenue from retail margins rather than service fees
Want to control your own inventory, reconditioning, and pricing
Plan to specialize in in-person sales or local retail markets

When to Add the Auto Broker Endorsement

You should add the auto broker endorsement if you:

Want to help clients find vehicles without carrying inventory
Receive frequent requests for specific models you don’t stock
Focus on sourcing vehicles from franchise stores or auctions
Prefer a concierge, fee-based model instead of a traditional dealership

How to Add the Auto Broker Endorsement to Your Dealer License

Step 1 — Confirm Your Dealer License Is in Good Standing

Ensure your dealer license is active, insured, and your bond is current. If you’re just starting, complete your dealer license application first. Learn more.

Step 2 — Prepare Broker Forms and Disclosures

Before applying, prepare the required documentation:

Broker fee disclosure form
Auto broker agreement
Client authorization form
Refund policy or cancellation terms

Templates → /playbook/resources/

Step 3 — Submit the DMV Broker Endorsement Application

File the appropriate DMV occupational license amendment form, listing your existing dealer number. Include your updated business documents, bond verification, and a copy of your current license.

Step 4 — Update Your Advertising and Records

Add your broker endorsement to any marketing or business descriptions. Maintain a separate file (“broker deal jacket”) for each brokered transaction and include copies of all client communications and disclosures.

Step 5 — Start Brokering Vehicles

Once approved, you can legally earn broker fees for arranging sales, negotiating purchases, or sourcing vehicles for clients.

Compliance and Advertising Rules

Advertising Requirements

Include your dealer license number (and endorsement) in all advertising.
Clearly state you are “a licensed California dealer with an auto broker endorsement.”
Avoid using phrases like “no dealer license required” or “independent broker.”

Record-Keeping

Maintain all contracts, fee disclosures, and client communications for at least 4 years. Records must be available for DMV inspection upon request.

Fee Rules

Broker fees must be disclosed in writing and signed by the customer before any transaction occurs. Refund and cancellation terms must be clear and documented.

Timeline and Cost Comparison

Category	Dealer License	Dealer + Broker Endorsement
Pre-Licensing Education	$100–$200	Same
Bond	$50,000	Same
Insurance	$500–$2,000 annually	Same
Application Fee	~$200	Add ~$100–$150
Setup Time	4–8 weeks	Add 1–2 weeks
Renewal	Annual	Annual

Real-World Examples

Example 1 — Retail Dealer Only
Maria owns “West Coast Auto Sales” in Riverside. She buys vehicles from Manheim, reconditions them, and sells directly to customers. Her profit comes from the retail markup.

Example 2 — Dealer + Auto Broker Endorsement
Jordan operates “Concierge Auto Group” in Los Angeles. He keeps a few display units but mostly sources cars on demand for clients. His profit comes from a broker fee rather than inventory resale.

Pros and Cons

	Retail Dealer License	Dealer + Auto Broker Endorsement
Pros	Direct sales, higher margins, full control	Low inventory risk, flexible model, higher-end clients
Cons	Higher overhead (lot, inventory)	Must still maintain dealer infrastructure
Best For	Traditional used car dealers	Concierge or sourcing-based businesses

Common Mistakes to Avoid

Applying for a “broker license” before obtaining a dealer license
Not disclosing broker fees or using unapproved contracts
Failing to maintain proper signage and records
Advertising as “independent” when you’re licensed under a dealership
Charging upfront deposits without a signed broker agreement

Avoid these pitfalls → /playbook/dealer-compliance/

Frequently Asked Questions

Can I get a broker license without being a dealer?: No. In California, the broker endorsement must be added to a retail dealer license.
Do I need to stock cars to be a broker?: No. You can broker vehicles without maintaining inventory, as long as your dealership meets physical location requirements.
How do brokers make money?: Typically through a flat fee, tiered service fee, or percentage of the purchase price (fully disclosed to the client).
Can I broker new cars?: Yes. Many brokers specialize in new vehicles sourced from franchise dealers.
How long does approval take?: If you already hold a dealer license, the endorsement can be processed within weeks once documents are complete.
Can I do both retail and broker sales?: Yes. Many dealers operate both models — retailing some vehicles and brokering others.

Downloads and Tools

Dealer vs. Broker Comparison Flowchart
Auto Broker Fee Disclosure Template
Broker Agreement Sample
Broker Intake Questionnaire
Inspection Readiness Checklist

Access all tools → /playbook/resources/

Why Work With California Dealer Academy

California’s #1 source for dealer licensing education and consulting. DMV-approved course covers both dealer and broker endorsement paths. Hands-on help with applications, entity formation, bond, insurance, and compliance.

Get Dealership Setup Consultation Get dealership setup help

Make Your Choice & Get Licensed — Expert Support Guides You Every Step

If you’re confused about whether you need a dealer license, a broker endorsement, or both — you’re not alone. We’ll help you determine exactly what you need and walk you through every step.

Enroll in your DMV-approved course Download the License Comparison Checklist Set up your dealer license