Illinois Designated Agent for Vehicle Dealer License Guide

Illinois Statutes Chapter 625 states that auto dealers conducting business in the state are to obtain a motor vehicle dealer license with the Secretary of State. The Illinois Secretary of State considers any registered person or business entity who sells or deals five or more motor vehicles a year, directly or indirectly, to be a motor vehicle dealer. The Illinois legislature enacted licensure and regulations to guarantee dealers engage in ethical business practices and pay taxes and fees required by the state.

The application process for an Illinois motor vehicle dealer license is complex, and each license type has its own specific set of requirements that need to be followed to maintain licensure. Below are nine general guidelines to obtain licensure as a licensed designated agent/motor vehicle dealer, but dealers should refer to the Illinois Dealer Handbook for in-depth details on the process.

  1. Register your business.
  2. Determine license type.
  3. Establish a location.
  4. Get insured.
  5. Complete dealer training courses, if applicable.
  6. Under criminal background check.
  7. Purchase an Illinois motor vehicle dealer bond.
  8. Compile documents and submit your application.
  9. Pass an inspection.

Step 1: Register your business.

The first step needed to undergo the application process is to establish your business. The Illinois Secretary of State requires applicants to obtain a statement of approval for registration from the Illinois Department of Revenue In addition to this approval, applicants will need to submit a list of the corporation’s officers, directors, and shareholders (if applicable) with at least a 10% ownership of the business. 

Applicants are required to prove good standing with the Secretary of State’s Department of Business Services.

Step 2: Determine license type.

Illinois offers a list of many different licenses that correspond to the nature of the dealer’s business. The applicant must specify and acquire a license for each type of business he or she wishes to operate. Below is a list of the most common Illinois dealer license types.

  • New and Used Dealer: Sells a combination of new and used automobiles 
  • Used Only Dealer: Sells only used motor vehicles
  • Motorcycle Dealer: Sells motorcycles
  • Trailer Dealer: Sells trailers
  • Community-Based Manufactured Home Dealer: Owns and operates on one or more contiguous tracts of land where five or more manufactured homes are located
  • Manufactured Home Dealer: Sells manufactured houses
  • Salvage Dealer: Sells salvage vehicles in place of insurance companies
  • Buy Here, Pay Here Used Dealer: Sells used motor vehicles and provides a buyer with direct financial options that do not go through third-party lenders

Step 3: Establish a location.

When applying for licensure, dealers must establish a place of business where all records and vehicles are located. The business location must meet the following requirements:

  • Contain an office space where all books and records are kept up-to-date
  • Include a telephone landline working up to code and registered in the business’s name; this should be listed in the area’s local directory
  • Have working electrical lights 
  • Display the dealership’s name on the front door or building
  • Be open a minimum of four consecutive hours for five days a week, along with a posted sign displaying these hours
  • Include a display lot showcasing new and used vehicles in different sections; this must include proper illumination if the dealership remains open after sunset
  • Display a permanently affixed sign that contains the name of the dealership that is visible from the closest public road

Once a location meets those requirements, the dealer’s business must also:

  • Pass local zoning and submit a completed Notice of Proper Zoning form as proof that the location complies with zoning regulations 
  • Provide proof of lease or ownership of the business location (acceptable form of proof is a copy of the lease or deed)
  • Provide a Hazard Waste Generator Number (if you have a repair shop on site); applicants can do this by contacting the Illinois Environmental Protection Agency
  • Obtain a copy of a manufacturer’s Franchise Agreement for franchise dealer licenses, if applicable

Step 4: Get insured.

Illinois auto vehicle designated agents must acquire liability insurance with minimum limits of 100/300/50 and be able to submit a Certificate of Insurance with the application. The minimum of required insurance limits are:

  • $100,000 per bodily injury to, or death of, any single person
  • $300,000 per bodily injury to, or death of, two or more persons in a single accident
  • $50,000 for any property damage

This insurance policy should not expire any sooner than December 31 of the year from when the license was first issued.

Step 5: Complete dealer training courses, if applicable.

Applicants who are first-time used car dealer applicants and wish to obtain licensure as a designated agent/motor vehicle dealer in the state of Illinois must undergo an eight-hour training course. This course is to be given by the Illinois Secretary of State’s Vehicle Services.

The class applicants must attend runs from 8 a.m. to 5 p.m. A pen, paper, and the receipt with the confirmation number should be brought to class. 

Step 6: Undergo a criminal background check.

Within the application process, it is mandatory to obtain a criminal background check by an Illinois State Police-approved vendor. Dealers can also contact the Illinois State Police Bureau of Identification at (815) 740-5160 for a list of Illinois-approved vendors. It is important to have no forcible felony within 10 years of applying to be approved. A receipt from an Illinois State Police-approved vendor, verifying a criminal background check was completed, should be attached to the motor vehicle dealer application. 

Candidates can access criminal history record check information here to understand the process in depth.

Step 7: Purchase an Illinois motor vehicle dealer bond.

The Illinois Secretary of State mandates that all designated agents post a surety bond in the amount of $50,000 per location to protect consumers. Any person who sells or deals at least five vehicles during a calendar year is considered a vehicle dealer.

The bond is in place to make sure that the principal (auto dealer) abides by all the rules and regulations outlined in the Illinois Vehicle Code. These rules are in place to protect consumers from instances of fraud, misinformation, or any other practices that might result in financial loss. Dealers will need to provide and attach a surety bond form with their application.

***Note: Motor vehicle dealers are now required to keep the surety bond in place for five years with the state before renewing.

Our team of bond experts works hard to get all of our customers bonded for the best rate possible. Apply now to get a quote today with SuretyBonds.com


Are you looking for an Illinois title bond for a vehicle? Visit our vehicle ownership certificate of title bond page to find out more why these bonds are required and how to get yours today.

Step 8: Compile documents and submit your application.

Dealers can access and fill out the Illinois Auto Dealer License application. This application must be notarized.

The following should be included with the application:

Fees

  • $1,000 Certificate of Authority annual fee ($500 for community- and non-community-based manufactured home dealers)
  • $500 fee if the initial application is submitted between June 15 and December 31 ($250 for community- and non-community-based manufactured home dealers)
  • $45 master plate set 
  • $13 for a set of seven duplicate dealer plates
  • $151 for a set of eight or more plates

**Note: Refer to the dealer plate application for information on the maximum number of plates permitted.

Once all documents are compiled and the application is complete, all new dealer license applications can be mailed to:

Secretary of State
Vehicle Services Department
Dealer Licensing Section
501 S. Second St., Rm. 069
Springfield, IL 62756

Step 9: Pass an inspection.

After the application is submitted by the designated agent candidate and all required fees have been paid, a representative from the Illinois Secretary of State’s office will contact the dealer to schedule an inspection to ensure that the dealer’s business establish meets all the minimum requirements.

How to Renew Your Illinois Auto Dealer’s License

The Illinois dealer license expires December 31 of each year, regardless of the date of issuance. Licenses must be renewed before the expiration date to ensure continuance of business without potential harm from claims being filed. Designated agents will receive a renewal reminder around September of each year and can view the renewal instructions packet for step-by-step instructions for renewing their application, including a guide to the number of dealer plates they are eligible for after that year.

Agents can mail their renewal application, along with a continuation certificate for their surety bond, to the following address:

Secretary of State
Vehicle Services Department
Dealer Licensing Section
501 S. Second St., Rm. 069
Springfield, IL 62756

Fees can be found in the renewal instructions packet for applicable schedules.