What is an Illinois Auto Dealer Bond?
Being a licensed auto dealer in the state of Illinois comes with several responsibilities. One of the components of obtaining a valid license is securing an Illinois auto dealer bond. An Illinois auto dealer bond is a guarantee that licensed dealerships will comply with state regulations when operating their business. Customers who are financially harmed due to illegal or fraudulent business practices when working with a dealership can file a claim against the bond.
An Illinois auto dealer bond is a contract between three parties. The surety company provides the bond to the principal, which is the licensed auto dealership. The obligee requiring the bond is the Illinois Secretary of State’s Vehicle Services Department. All licensed auto dealers are required to have a valid bond for the first 36 months of operating the dealership in order to comply with the law.
What Does an Illinois Auto Dealer Bond Cost?
Illinois requires an auto dealer bond of at least $20,000 for all new dealerships. However, the full amount of the bond is not the price you pay to the surety company. Your auto dealer bond price is a percentage of the $20,000, ranging from 1 to 10%.
The surety company providing your Illinois auto dealer bond determines the percentage you pay based on certain details. Your personal credit score, experience in the industry, and business financials all play a part in your bond pricing. Bad credit due to civil judgments or liens, bankruptcy, or other mismanagement of finances in the past leads to a higher bond cost.
How Do You Get an Illinois Auto Dealer Bond?
Getting an Illinois auto dealer bond is a simple process. You can submit a request for a free quote online, and fill out your bond application in a matter of a few minutes. The surety company reviews your application details and provides you with the percentage rate you will pay for your bond and instructions for completing the process.