What is an Illinois Auto Dealer Bond?
Being a licensed auto dealer in the state of Illinois comes with several responsibilities. One component of obtaining a valid license is securing an Illinois auto dealer bond. An Illinois auto dealer bond guarantees 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.
How Does an Illinois Auto Dealer Bond Work?
An Illinois auto dealer bond is a contract between three parties.
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.
The principal is the auto dealership needing the bond to become licensed as a business in the state.
The surety company provides the bond to the principal and pays any claims made by customers. The principal must repay the surety company for the claims over time.
Illinois Auto Dealer Bond Obligee Details
In the state of Illinois, auto dealers must hold a license to operate their business legally. Part of the licensing requirement, mandated by the Illinois Secretary of State, is to secure an Illinois auto dealer bond. The Secretary of State is the obligee of the bond and contact information is as follows:
Secretary of State
Vehicle Services Department
Dealer Licensing Section
501 S. Second Street, Rm 069
Springfield, Illinois 62756
Am I Required to Get an Illinois Auto Dealer Bond?
Illinois state law dictates who must obtain both licenses and bonds. Any person or business that engages in the sale of new motor vehicles, used vehicles, motorcycles, or trailers must secure an auto dealer bond. Manufactured home dealers must also have an Illinois auto dealer bond in place.
How Do You Get an Illinois Auto Dealer Bond?
You can submit a request for a free quote online and fill out your bond application in a matter of 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.
What Does an Illinois Auto Dealer Bond Cost?
Illinois requires an auto dealer bond of at least $20,000 for all new dealerships, but the total bond amount 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 percent.
Can I Get an Illinois Auto Dealer Bond with Bad Credit?
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 won’t disqualify you from obtaining an auto dealer bond, but if you have poor credit history due to civil judgments or liens, bankruptcy, or other mismanagement of finances in the past, then you’ll likely have to pay a higher bond cost.
Auto Dealer Bond Terms and Expiration Date in Illinois
Illinois auto dealer bonds expire at the same time an auto dealer license expires. This takes place annually on December 31. Licensed Illinois auto dealers must ensure their bond is renewed before this time to stay compliant with Illinois laws.