How to Get an Illinois Dealer License

Published: Apr 5, 2016
Starting your dealership in Illinois entails that you have to get an Illinois dealer license.Thinking about starting your own auto dealership business in Illinois? While this is certainly a great opportunity to explore, it also involves passing through certain administrative steps. The most important one is obtaining your Illinois dealer license.

Getting licensed is not a complicated process, but you do need to meet a list of different license requirements set by the Department of Motor Vehicles of the Illinois Secretary of State’s Office. One of the most important ones is that you need to post an Illinois auto dealer bond.  

Let’s take a look at the licensing process for auto dealers in Illinois, so you can be well-prepared for launching your new dealership in the state.

Illinois dealer license types

First off, who needs to obtain an Illinois auto dealer license? If you are selling or dealing with more than five motor vehicles in a year, you will need to get a dealer license in Illinois.

There are four main types of dealer licenses, depending on your field of operation:

  • Illinois used car dealer license
  • Illinois franchise dealer license (includes the right to sell used vehicles)
  • Illinois motorcycle dealer license
  • Illinois mobile homes and trailers dealer license

The Illinois Secretary of State is also in charge of all in-transit, repossessor and manufacturer applications, as well as dealer plate inquiries and dealer licensing audits. It is the body that issues Certificates of Authority for all auction businesses, vehicle rebuilders, scrap metal processors and recyclers. The full list of Instructions for Dealer Licenses is available online.

What are the Illinois dealer license requirements?

To start dealing with new and used vehicles, you need to meet a list of Illinois dealer license requirements.

The first step in obtaining your dealer license is to complete a dealer license application. Before submitting it, you need to meet a list of other requirements and provide all necessary documentation:

  • A copy of manufacturer’s Franchise Agreement for franchise dealer licenses;
  • Proof of lease or property of your office location;
  • Criminal background check;
  • Completed Notice of Proper Zoning as a proof that you comply with zoning regulations;
  • Documents from the Department of Business Services showing whether your business is a proprietorship, partnership, trust, or you are incorporated;
  • Proof of compliance with the requirements of the Illinois Environmental Protection Agency, if needed;
  • Insurance in the name of your entity (dealership): $100,000 bodily injury, $50,000 property damage and $300,000 per incident;
  • $20,000 Illinois auto dealer bond;
  • Payment of applicable annual fees.

The annual fees that you will have to pay depend on the type of Certificate of Authority you need and the period for which you are applying:

  • If you are applying before June 15, the annual fee is $1,000. (Dealer License Certificate of Authority)
  • If you are applying after June 15, then the fee is $500. (Dealer License Certificate of Authority)
  • For a Supplemental Dealer License Certificate of Authority needed for each additional location, $100 per year or $50 if filed after June 15. If you are dealing with used vehicles, the fees are $50 and $25 respectively.
  • $45 fee per year for Illinois dealer license plates (master plates) and $13 for duplicate dealer plates.

Once you have submitted your Illinois car dealer license application together with all listed required documents, your case will be reviewed. If you meet all requirements, you will be issued your Certificate of Authority, usually in two to four weeks time. The licensing period ends on December 31st of each year, so you need to undergo the renewal process before that.   

Getting your Illinois auto dealer bond

Getting your Illinois auto dealer bond doesn't need to be costly.As mentioned already, getting bonded is one of the main requirements for obtaining your Illinois dealer license. Let’s look into what surety bonds are and how they work in the case of auto dealerships.

State authorities require dealers to get a bond in order to protect the interest of citizens. The auto dealer bond guarantees that your business will abide by all applicable regulations. If you fail to do so, a claim can be made on your bond. In case it is proven, the bond ensures proper compensation for affected parties.

To get bonded, you do not need to pay the full bond amount of $20,000. In fact, you need to cover only a fraction of it, which is called the bond premium. It is usually in the range of 1%-3% for the standard bonding market. This means you might end up paying only $200 to $600 for your bond. 

Your actual surety bond cost is formulated once you apply with a surety and it examines your personal and business finances. The bond premium is set on the basis of the perceived risk involved in getting your business bonded, so a good credit score and solid financials will reduce your bond price.

Ready to start your bonding process and get licensed? Apply online for a free Illinois auto dealer bond quote from Lance Surety Bonds. For any questions, don’t hesitate to call us at 877.514.5146 or send your inquiry to info@suretybonds.org.

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Victor Lance is the founder and president of Lance Surety Bond Associates, Inc. He began his career as an officer in the U.S. Marine Corps, serving two combat tours. As president of Lance Surety, he now focuses on educating and assisting small businesses throughout the country with various license and bond requirements. Victor graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan's Ross School of Business.