Illinois Motor Vehicle Dealer (Designated Agent) Bond

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Who Is Required To Purchase an Illinois Auto Dealer Bond?

Illinois is unique among most states because they don't outline distinct dealer classifications and licenses.

All vehicle dealers are required to purchase a surety bond (auto dealer bond) before they can have a license issued for a dealership location.

As defined by the Illinois Secretary of State, a dealer is:

"Any person engaged in the business of selling or dealing in, on consignment or otherwise, five or more vehicles during the year, or who acts as an intermediary, agent or broker for any licensed dealer or vehicle purchaser, or who represents or advertises that he/she is engaged in or intends to engage in such a business."

The auto dealer bond amount is $50,000 for Illinois vehicle dealer licenses.

If you're selling manufactured homes (a manufactured Home Dealer) your surety bond amount is $150,000

 

 

Why is an Illinois Motor Vehicle Dealer Bond Required?

During the licensing process, prospective dealers must meet a number of requirements before the state will issue a license.

Some of these licensing requirements are:

• Meeting minimum education hours
• Submitting the proper business records
• Obtaining the correct amount of insurance to protect customers
• Ensuring the dealership is setup according to state rules

One of the licensing requirements is the $50,000 auto dealer surety bond.

And remember the surety bond is the primary tool the state and customers have to hold their dealerships accountable to promises they make during the licensing process.

The bond is protection for the Illinois Secretary of State, Department of Revenue and the dealer's customers.

What Does an Illinois Auto Dealer Bond Protect Against?

Despite the licensing process and rules the state uses to legitimize dealerships, every year there will be a small number of dealers who commit fraudulent acts to make more money.

Examples of these fraudulent acts include:

• Improperly transferring on title on sold vehicles
• Selling vehicles with no title or worse, fake titles
• Lying about vehicle condition, accident history, or milage
• Stealing from customer deposits
• Switching out vehicles when delivering on sold vehicles
• Failing to pay the correct amount of sales tax on sold vehicles

If a dealership is found guilty of any of these types. of actions, a claim can be made against the dealer bond for financial recourse.

The $50,000 bond amount is the maximum amount of coverage available for claims.

How Much Does an Illinois Auto Dealer Bond Cost?

The cost of the $50,000 Illinois auto dealer bond is based on a rate quoted by a surety.

A surety is an insurance company that underwrites these auto dealer bonds. There are many different sureties who do this and each one has their own standards for how they access an applicant.

Primarily the surety will use these 3 factors when looking at an applicant for this auto dealer bond:

• The personal credit of the owner or owners if there are multiple owners
• Dealership experience and industry experience
• Any prior bond claims if any owner has been licensed in the past

Because each surety does their own independent analysis, the rates they quote will vary. We've seen rates vary by multiple percentage points.

This is why it's important to use a specialized surety agency like Surety Bonds Direct.

It's our job to get you the lowest possible rate for your bond. And if we can save you 1% to 2% on your bond rate, this can be hundreds of dollars you can use for other licensing costs.

Here's a table showing you examples of pricing for the Illinois $50,000 auto dealer bond. Notice how drastically the pricing changes based on the rate.

It's important to get your specific pricing and the process is easy to start.

Click here and start the online quote process. It takes 90 seconds to submit your request.

And there's no cost to have our bond specialists price shop for you and find you the lowest rate. Plus, once they do, you're under no obligation to purchase from us.

If you prefer to speak with a bond specialist, you can call 1-800-608-9950.

What Happens After You Purchase Your Auto Dealer Bond?

After you purchase your bond, Surety Bonds Direct's issuing department will prepare your bond with the correct:

• Signatures
• Legal seals
• And the required power of attorney

The Illinois Secretary of State will accept a copy of the bond. This allows us to email you a copy of your bond to you making the process faster.

Renewing Your Auto Dealer Bond

In Illinois, dealer licenses have a hard expiration date or December 31st each year. This is also required for your bond.

Renewal notices for your licenses are sent beginning in September. For your bond, we will begin reaching out to you 30 to 45 days in advance.

Your bond specialist will have low pricing already available making the renewal process seamless.

Once you pay the renewal premium, your bond remains active.

The Illinois Auto Dealer Bond is Continuous

A continuous bond means the original bond remains active as long as you pay the renewal premium.

This means once you pay the renewal premium, you won't have to submit a new bond to the state.

However, if we can get your lower pricing which requires a new bond, then you'll have to file your new bond. But this is an easy process which we can help with.

 

 

Motor Vehicle Dealer Bonds And Getting Your Illinois Business License/Registration

Applying for an Illinois vehicle dealer bond is very straightforward since Illinois does not separate between the different types of vehicle classifications.

At a high level the steps are:

1. Complete and notarize the official application
2. Outline the appropriate business contact information and company structure
3. Show the completion of the Secretary of State training program
4. Purchase the auto dealer bond
5. Purchase the required minimum amounts of liability and property insurance
6. Show proof of the dealership lease or deed
7. Prepare and pass the dealership location requirements
8. If you have a repair shop on site, you must obtain a hazardous waste generator number
9. Complete a Police approved criminal background check of all owners

Additional Illinois Motor Vehicle Dealer Bond Resources & Links

Designated Agent Bond for Illinois Vehicle Dealers

Secretary of State Dealer License Application

Illinois General Assembly Compiled Statutes – Illinois Vehicle Code