Salvage Dealer License in Texas

Salvage Vehicles

Salvage motor vehicles are so severely damaged or missing a vital part that the cost of repair exceeds their pre-accident value. These vehicles can be rebuilt and used on public roads once issued with a blue title. Nonrepairable motor vehicles are so damaged that they are only useful as sources of scrap metal. These cannot be rebuilt and thus cannot be operated on public roads and hold different titles from salvage vehicles.

To get a better understanding of what title brands mean, please read through this page. They typically fall under:

• Clear,
• Custom Vehicle or Replica,
• Gray Market,
• Junk,
• Manufacturer Buyback or Warranty Return
• Odometer
• Rebuilt/ Prior Salvage: These are salvage vehicles that have been rebuilt to required standards and have passed safety and anti-theft inspections.
• Salvage: These are vehicles that have been damaged, wrecked, or destroyed such that their rebuild or repair cost exceeds their pre-accident value. They can be rebuilt for use on public roads.
• VIN Replaced by a New State-Assigned VIN, and
• Water Damage.

Who Needs a Texas Salvage License?

Anyone who wants to buy, sell, repair, and rebuild salvage and nonrepairable motor vehicles may require a license. Licenses fall under salvage dealer licenses (for those salvaging damaged cars for parts) and used car dealer GDN licenses (for those rebuilding salvage vehicles). Please note that you should obtain a used car dealer (GDN) license when selling rebuilt cars.

However, not everyone will require a license as it comes down to the number of cars you sell per year as follows:

Criteria	Need GDN or Salvage Dealer License
Buying or selling more than 5 salvage or nonrepairable vehicles in a calendar year	Yes
Buying 5 or fewer salvage or nonrepairable vehicles in a calendar year	No
Rebuilding more than 5 salvage vehicles in a calendar year	Yes
Rebuilding 5 or fewer salvage vehicles in a calendar year	No

What Are the Licensing Requirements?

Before applying for your car dealer (GDN) license, you must meet the following requirements:

1. You must have a business location that should not be in a residential complex. You cannot operate your business elsewhere.
2. The business location must have a sign indicating the type of business. Moreover, you must have an office where you will keep the motor vehicle records.
3. Your business must be in line with the local government, city, county, and state laws for you to obtain and maintain a salvage dealer license. You must check with concerned authorities before making a license application.
4. You must visit the National Motor Vehicle Title Information System (NMVTIS) and register your business. This system enables you to report your motor vehicle records and ensures that the U.S. Department of Justice can track your transactions. Without an NMVTIS registration number, the TxDMV will not issue you with a salvage license.
5. If you want to get a used car dealer (GDN) license, you must purchase a 2-year Texas auto dealer surety bond worth $25,000.
6. You must register your business and provide the following documents as proof:

• A certificate of organization, incorporation, or partnership proves that you have registered your business with the Texas Secretary of State (SOS). If you are a foreign company, you must apply for a certificate of authority to conduct business in the state.
• An assumed name certificate: Suppose you will use a different name for the salvage dealership other than that used in your primary registration. In that case, you must obtain an assumed name certificate from the SOS.
• A franchise tax account status: LLCs and corporations operating in Texas are subject to a franchise tax. You will need to provide details of your current account status, which you can get from the Texas Comptroller of Public Accounts.
• A Texas Sales and Use Tax Permit: You will also need to provide a copy of your account from the Texas Comptroller of Public Accounts.

Why is a Surety Bond Required?

Texas requires a surety bond to protect itself and its residents from the adverse effects resulting from unlawful or unethical business practices. If you do not operate your business in compliance with the set laws, aggrieved parties can take you to court. If they can prove that you caused them financial losses due to negligence or other malpractices, the state can award them up to $25,000 of the surety bond.

How Does It Work?

The surety bond company is not obligated to pay claims on your behalf. Instead, when an aggrieved party makes a claim against you, the company investigates the validity of the said claim. It then attempts to settle with the third party, but you are responsible for paying the claim if they are not successful. If you cannot pay the claim immediately, the company steps in and pays the third party on your behalf. You must then reimburse the surety company for your bond to remain in effect.

What Does It Cost?

While set at $25,000, salvage dealer surety bonds do not cost the same in premiums, as it comes down to your credit score. The company calculates the premium as a percentage of the bond amount and decides your percentage based on your score. You can pay as little as 1% in premiums if you have a good score, but higher scores will earn you much higher premiums.

Fees

Before 1^st September 2019, salvage dealers would renew licenses for individual endorsements, e.g., salvage pool operator and salvage builder. Following House Bill 1667, salvage dealers can now apply for a comprehensive license covering all endorsement functions.

The initial license costs $190, while subsequent renewals will set you back $170. A license will remain in effect for two years before it’s due for renewal. You must pay the renewal fee before the grace period lapses. Else, you will need to apply for a new license.

How to Apply for Salvage Dealer License

The TxDMV now accepts online license applications through its eLICENSING system. It enables salvage dealers and other motor vehicle licensees in the state to apply for, change, and even renew their licenses online. You can access the user-friendly system 24/7 to submit license applications, make payments, fast-track your approvals, and even track the progress on your applications.

Selling

Selling Without Repairing

Suppose you will not repair salvage or nonrepairable motor vehicles and will instead sell them as they are. In this case, you must submit the following documents to the county tax office:

• Disclosure of Nonrepairable Motor Vehicle
• Disclosure of Salvage Motor Vehicle
• Notice of Non-repairable Titled Motor Vehicle
• Notice of Salvage Titled Vehicle

Selling Rebuilt

Suppose you want to sell rebuilt motor vehicles; you must obtain a GDN license. It will enable you to submit title paperwork to the county tax office on behalf of the purchaser. You can learn more about title brands and their meanings here.

Selling Used Parts

Suppose you want to sell used car parts. In this case, you will need to check with the Texas Department of Licensing and Regulation (TDLR) if you need licensing. You can reach them by visiting their website or calling 800-803-9202 (toll-free in Texas) or 512-463-6599 (locally).

Salvage Dealer List

The list below takes you through the active salvage dealers operating in Texas as of 05/12/2021. If you want the complete spreadsheet, please find it here.

Additional Info

Do you have further inquiries about salvage dealer licenses? Please use the contact details below:

Query	Contact
Information about becoming a salvage dealer	Call (888) 368-4689
Information on the titling of salvage vehicles	Call (512) 465-5659
File a complaint against a salvage dealer	Submit Complaint Form
File a complaint against a person operating as a salvage dealer without a license	Submit Complaint Form
Reporting vehicle transactions using the NMVTIS system	Visit NMVTIS website
Questions on used auto parts recycling licensing	Visit the TDLR website or call them on (800) 803-9202 or (512) 463-6599.