Texas Salvage License Requirements

Request Quote

Who Needs a Texas Salvage License?

In Texas, if you are only salvaging damaged vehicles for parts, you�ll need a salvage dealer license. But if you are rebuilding salvage vehicles for sale as rebuilt vehicles, you�ll need a used car dealer (GDN) license. You won�t need either license if you buy or sell five or fewer salvage or non-repairable vehicles in a calendar year.

What Are the Licensing Requirements?

Several requirements must be met before the Texas Division of Motor Vehicles (TxDMV) will issue a salvage license. These requirements include:

  1. Establishing a business location that complies with state regulations.
  2. Establishing a legal business entity and completing all applicable registrations.
  3. Registering for the National Motor Vehicle Title Information System (NMVTIS) program through which all salvage vehicle transactions must be reported. You’ll need to provide your NMVTIS number when you submit your license application.
  4. Purchasing a two-year $25,000 Texas auto dealer suretybond if you are applying for a GDN license that will allow you to sell rebuilt vehicles.

Why is a Surety Bond Required?

The surety bond is your guarantee to operate your salvage business in complete compliance with all applicable laws and regulations. The bond protects the state of Texas and consumers against financial losses resulting from any unlawful or unethical business conduct on your part.

If you violate the terms of the surety bond agreement, any injured party who can prove a financial loss has the right to file a claim against the surety bond and be compensated up to the $25,000 required bond amount.

Understanding How Surety Bonds Work for Texas Salvage Licenses

When a claim is filed, the surety bond company will investigate to make sure it�s valid before attempting to negotiate a settlement with the claimant. If no settlement is reached, you are legally obligated to pay the claim.

However, the surety bond will often go ahead and pay a claim to give the salvage dealer time to put the funds together to cover it. Be aware that if the surety bond company pays a claim on your behalf, the law requires you to reimburse the company. The surety bond company has no legal responsibility to pay claims for you.

What Does It Cost?

The annual premium for any surety bond is calculated as a small percentage of the required bond amount, which in the case of a salvage dealer bond, is $25,000. The surety company decides on a case-by-case basis what that percentage (the premium rate) will be. The biggest factor in that decision is the bond applicant�s personal credit rating. If your credit score is good, you could be assigned a premium rate as low as 1%. If your credit score is poor, you�ll pay a higher premium rate, but you should still be able to get bonded.

Get Bonded Today

Give us a call or request a quote online for the surety bond you�ll need to get meet the Texas salvage license requirements.

Request Quote