What Is an Illinois Auto Dealer Bond?
Posting an Illinois auto dealer bond is an indispensable requirement when applying for your Illinois car dealer license. The bond must remain valid during the first 36 months of running your dealership.
The auto dealer bond functions as protection, for the state of Illinois and its citizens, against fraudulent activities or misdeeds that dealers might engage in. Auto dealer bonds guarantee that your dealership will follow applicable rules and conduct lawful business.
Illinois auto dealer bonds are a type of surety bonds. As such, they are a contract between three parties. Your dealership is the principal required to post the bond, the state is the obligee, and the surety is the bond underwriter.
Surety Bond Name: Illinois Motor Vehicle Dealer Bond
Surety Bond Amount:
- $20,000 auto dealer bond (increased to $50,000 as of Jan. 1, 2018)
Obligee: Secretary of StateVehicle Services Department
501 S. Second St., Rm. 069
Springfield, IL 62756
- Required Expiration Date of the Bond: December 31st of each year
If you don’t comply with the state rules governing dealerships, a claim can be made on your bond. Learn more about how claims against auto dealers bonds are handled in the Questions section below.
Questions about Auto Dealer Bonds in Illinois
How much does an Illinois auto dealer bond cost?
The Vehicle Services Department of the Secretary of State’s Office requires that auto dealers post a $20,000 Illinois auto dealer bond.
The surety bond amount is the maximum sum that claimants can demand on proven claims against you. Your actual surety bond cost is much lower. To get bonded, you need to pay only a percentage of the bond amount, called the bond premium.
For standard market applicants, this means between 1% and 3% of $20,000, or between $200 and $600 for your Illinois motor vehicle dealer bond.
|Surety Bond Cost Based on Credit Score|
|Surety bond name||Surety bond amount||Above 700||Below 650|
|Illinois auto dealer bond||$20,000||$150-$300||$1000-$3000|
The bond premium that you’re required pay for your bond can be assessed only after you complete a full application. Your surety will review your personal credit score, personal and business financials, as well as your assets and liquidity. On the basis of your financial profile, your bond price is determined based on the risk of getting you bonded. Better overall finances means you will pay less for your Illinois auto dealer bond.
For a full overview of how your bond price is set, you can consult our surety bond cost page.
Can I get an Illinois auto dealer bond with bad credit?
Lance Surety Bonds runs a Bad Credit Program, to help dealers with not-so-perfect credit, past tax liens, civil judgments, or bankruptcies to get bonded.
The usual premiums for bad credit applicants are between 5% and 10%. The higher price compensates for the increased risk, yet the program is still an affordable solution for dealers with problematic finances.
We are committed to getting you bonded at the best price on the market. We foster strong partnerships with multiple A-rated, T-listed surety companies, so we can find the right bonding option for your particular case.
How do I get my Illinois auto dealer bond?
You can start your bonding process today. Just apply online to get your free, no-obligations Illinois auto dealer bond quote. After submitting your full application, we will contact you in no time with your exact bond price.
Call us at (877) 514-5146 if you have any questions about your application, or surety bonds. Lance Surety Bonds’ specialists will be happy to assist you.
For further information about the bonding process, check out our How to Get Bonded page for valuable tips.
How do I renew my Illinois auto dealer bond?
You must have an Illinois auto dealer bond during the first 36 months of operation as an auto dealer in the state. The bond needs to be renewed together with the license, which expires on December 31st of each year.
When you get bonded with Lance Surety Bonds, we’ll make sure you never miss a renewal deadline. You will get a renewal reminder several months before the deadline, and we will also contact you via mail, fax, and email if needed. This guarantees that you will have enough time to respond, and renew your Illinois car dealer bond in time to stay in full compliance.
Since your financial status can change over time, your surety bond cost can also fluctuate. Improving your personal credit score and business finances can significantly decrease your bond price from year to year.
How do I get my Illinois auto dealer license?
Getting an Illinois auto dealer bond is only one of several steps that you must complete when applying for your Illinois car dealer license.
You need to submit a full application to the Illinois Vehicle Services Department of the Secretary of State’s Office. Other documents that you need to supply include a certificate of insurance, proper zoning papers, and a proof of ownership or lease for your business location, among others. The license needs to be renewed annually at the end of the year.
How are bond claims handled for auto dealer bonds?
Surety bonds function a bit like insurance in reverse. Instead of protecting your business, their purpose is to safeguard the interests of your clients.
Auto dealers who engage in fraudulent activities in their business operations can face a claim on their bond. In the case of Illinois, the affected parties in proven claims can be awarded a compensation of up to $20,000, which is the penal sum of the bond. At first, your surety provider will cover the costs. Soon after, though, your dealership needs to reimburse it fully.
The principle of how bonds work makes claims highly undesirable. They can harm your dealership’s finances and reputation, plus prevent you from getting bonded in the future.