Illinois used auto dealers who finance the sale of vehicles in-house are required by House Bill 3269 to be licensed and post a surety bond or certificate of deposit.
What is the required surety bond amount?
The surety bond or certificate of deposit must be in the amount of $50,000 for every location owned. This means a bond is required for every location selling or leasing used vehicles, transmitting titles, and transmitting registration fees or taxes. For example, if a business had four locations that fit these criteria, the business must obtain four $50,000 surety bonds or certificates of deposit.
How much does this surety bond cost?
The cost of this surety bond is subject to underwriting consideration, meaning the applicant’s credit history, financials and/or the bond application will be examined before the underwriter will provide a quote. Because this bond expires on December 31st, the premium will be prorated based on the effective date of the bond. Therefore, if two dealers with identical qualifications apply 3 months apart, their premium could end up being drastically different for the initial bond term.
All applicants will pay different premiums for their bonds as applicant qualifications vary from person to person. To find out the exact cost of your surety bond, visit SuretyBonds.com.
What is a “buy here, pay here” car dealer?
A “buy here, pay here” car dealer is a business entity that sells or leases vehicles and finances the sales in-house or without using a third-party lender. These dealers extend credit to consumers themselves, and the consumers are often those with a poor credit history who do not meet other car dealers’ standards.
Who must obtain a license and a surety bond or certificate?
House Bill 3269 went into effect on January 1st of 2020, so ALL used vehicle dealers with a “buy here, pay here” business model must comply with the law by getting licensed and bonded.
How to get a used auto dealer license
An auto dealer is a person engaged in the selling or leasing of five or more vehicles per year and performs the role of ‘agent’ or ‘representative’ for a business. If you meet these requirements or wish to perform these duties for used vehicles, the following steps must be completed to receive a used auto dealer license.
- First-time applicants must attend an eight-hour training session provided by the office of the Secretary of State
- Training must be completed prior to the issuance of a license
- To register for training, applicants can either email Kathy O’Connell or call (217) 785-2050
- Complete, sign and notarize an application and include the proper licensing materials:
- Certificate of insurance with coverage amounts of $100,000 for bodily injury, $300,000 for each accident, and $50,000 for property damage
- A $50,000 surety bond or certificate of deposit
- Payment for the total of all applicable fees
- Receipt verifying a criminal background check was completed
- Proof of completion of the training program
Completed applications may be sent to the office of the Secretary of State at the following address:
Illinois Secretary of State
Dealer/Remitter Licensing Section
501 S. Second St. Rm. 069
Springfield, IL 62756-7000
- Vehicle dealer licenses, whether for new or used vehicles, cost $1,000
- License plates are available for vehicles and cost $45 for a master set and $13 for duplicate plates as established in the Illinois Vehicle Code (625ILCS 5/3-602)
- Secretary of State personnel must inspect the business and ensure it meets all requirements of the Illinois Administrative Code, Section 1020.10
Vehicle dealer licenses may not be transferred upon the sale of the dealership.
Processing can take two to four weeks to complete before a license may be issued. All licenses expire on December 31st, and renewal notices are sent to licensees in September.