How to Get Your Illinois Dealer License

Getting your Illinois dealer license involves a number of steps as detailed below.

1. Determine Your License Type

The state of Illinois offers different licenses corresponding to the nature of your business. The available Illinois auto dealer license types are:

• Franchise dealer license – For selling new cars
• New and used car license – For selling new and old motor vehicles
• Used-only dealer license – For selling only used cars
• Motorcycle dealer license – For selling only motorcycles
• Mobile homes and trailer dealer license – For selling trailers, RVs, and mobile homes
• Salvage dealer license – For selling savage cars on behalf of insurance companies
• Buy here, pay here dealer license – For selling used cars and offering buyers financial options that don’t need third-party lenders

2. Register Your Business

The next step is to register your business and get a business license. You are required by the Illinois Secretary of State to have a registration statement of approval from the Illinois Department of Revenue.

You also need to submit a list of your business’s directors, officers, and shareholders with over 10% business ownership. Finally, you must prove a good standing with the Department of Business Service of the Secretary of State.

3. Establish a Location

Before starting the application process, you must have an established place of business where you keep all the vehicles and records. Your business location must meet the following requirements:

• Have a permanent office where you store all your records and books
• Have working and safe electrical connections
• Have a working telephone or landline whose phone number is registered under your business name and included in the local area’s directory
• Have a public display of your dealership’s name on the building or front door
• Have a permanent sign indicating the business’s name and visible from the nearest public road
• Have a display lot with a section for new and used cars (where applicable)
• Have a public display of operating hours, which should be at least four consecutive hours for five days weekly
• Meet the local zoning requirements

Can I Get a Dealer License Without a Car Lot in Illinois?

You can get an auto dealer license in Illinois without a lot, provided you have an established place of business. The zoning department will inform you if your location is good enough to sell cars from, and the DMV will inspect to verify that you can use that location to sell cars. Other steps you must complete include the following:

• Obtain and complete the application checklist
• Take a dealership training course
• Register your business
• Get insured
• Pay for a surety bond
• Obtain a Federal Tax Identification Number
• Obtain a Sales Tax Number
• Submit the application

4. Get Insured

Liability insurance is a must to become a licensed dealer in Illinois. Your insurance must have minimum coverage limits of:

• $100,000 for bodily injury or death of one person
• $300,000 for bodily injury or death of two people in one accident
• $50,000 for property damage

This requirement, however, does not apply to dealers selling mobile homes and trailers. Your insurance should not expire after December 31st in the year you first obtained it.

5. Take a Dealer Training Course

If you are applying for a used car dealer license for the first time, you must undergo and complete an eight-hour dealer training course. This course is usually offered by the Illinois Secretary of State’s office, and you can register through Ilsos.gov or call (217) 785-2050.

The training covers topics like applicable taxes, licensing requirements, and consumer protection laws. You should bring a receipt with your confirmation number, pen, and paper to the class.

6. Pass a Criminal Background Check

You must undergo a criminal background check by a state police-approved vendor in Illinois. To pass the background check, you must not have any forcible felony charges within 10 years of applying for your auto dealer license.

7. Get an Illinois Auto Dealer Surety Bond

To protect your customers, you must have a $50,000 surety bond per location. An auto dealer bond guarantees that you will comply with all state laws concerning you and your business, outlined in the Illinois Administrative Code and Illinois Vehicle Code.

It also protects your customers against unfair dealings and ensures that you apply your warranty policies to all your clients.

To get the surety bond, you have to pay a premium, which ranges between 1% and 3% of the full bond amount. The company you take the bond from determines your premium based on your financial statements and credit score. The higher your credit score, the lower the premiums.

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8. Compile the Necessary Documents

First, you must access and complete the Illinois vehicle dealer license application, after which you will compile the following documents to send alongside the application. They include:

• Approval statement from the Illinois Department of Revenue to prove business registration
• Surety bond form or certificate of deposit in the Secretary of State’s name and business name
• A receipt verifying your criminal background check from an Illinois state police-approved vendor
• A filled-out notice of proper zoning form
• Proof of good standing
• Hazard Waste General Number if you want to run a repair shop
• A copy of the manufacturers’ franchise agreement if you are selling new cars
• Insurance certificate with your business name and expiry date
• Copy of your lease or proof of property
• Proof of training program completion

9. Submit Your Application and Pay Fees

Once you have filled your application form and compiled all the necessary documents, the next step is to send them to the Illinois Vehicle Service Department through:

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

You must also pay any necessary fees when sending the application form and documents.

How Much Does An Illinois Dealer License Cost?

Illinois motor vehicle license fees differ depending on how many locations you have and when you are getting the license. The associated fees include:

• $1,000 Certificate of Authority annual fee for used and new car dealers applying before June 15th
• $500 Certificate of Authority annual fee for community plus non-community-based mobile home and trailer dealers applying before June 15th
• $500 licensing fee for used and new car dealers applying after June 15th
• $250 licensing fee for community plus non-community-based mobile home and trailer dealers applying after June 15th

If you are applying for additional locations:

• $100 annual fee for franchised auto dealers applying before June 15th
• $50 licensing fee for franchised car dealers applying after June 15th
• $50 annual fee for used car dealers applying before June 15th
• $25 fee for used car dealers applying after June 15th

For license plates:

• $45 for a master plate set
• $13 if you duplicate dealer license plates
• $101 for extra duplicate plates

You can also get temporary registration for plates in Illinois. After submitting all the documents and payments, your application will be under review, and you will receive your license after two to four weeks.

Pass an Inspection

An Illinois Secretary of State’s office will contact you to conduct a physical inspection of your business premises. This ensures that it meets all the state requirements, and failing to do so can lead to suspension or revocation of the license.

Renewing Your Illinois Motor Vehicle Dealer License

Every Illinois dealer license expires on December 31st regardless of when you got it. You must renew your license before the expiration date to avoid additional charges. Licensed dealers receive renewal reminders around September every year, and you can get a step-by-step guide from the renewal instructions packet.

After filling out the renewal application, you should send it alongside your bond continuation certificate to:

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

Who Needs an Illinois Dealer License?

The Illinois Vehicle Code 625 ILCS 5/5-102 states that you must be a licensed dealer if you sell over five cars annually. This is unlike Florida, where you need a license to sell over three vehicles or one mobile home.

Do I Need to Be an Illinois Resident to Get a Dealer’s License?

The Illinois vehicle code outlines all the requirements and processes people must follow to obtain automotive dealer licenses in the state. However, these provisions don’t apply to non-residents engaging in a car dealer business if they use the state highways with an in-transit plate or have a license from another state.

Final Thoughts

The state of Illinois requires that you have a motor vehicle license if you want to sell more than five cars in a year. To get the license, you must adhere to several requirements, including submitting necessary documents, getting a surety bond, obtaining liability insurance, and having a suitable business location.