If you're interested in the automotive industry and want to start your own car dealership in Illinois, obtaining a dealer's license is essential. While the process may appear complex, this step-by-step guide will walk you through the necessary procedures and requirements to help you obtain a dealer's license in the state of Illinois.

9 Steps to Getting an Illinois Dealer’s License

1. Determine the Type of Car Dealer License 

Illinois offers different types of dealer licenses, including new vehicle dealer, used vehicle dealer, wholesale vehicle dealer, and vehicle auction dealer. It's important to identify the license type that aligns with your business model before proceeding further. These are the intended purposes of Illinois’ licensing categories:

• Franchise dealer license: For selling new cars 
• New and used car license: For selling new and used motor vehicles
• Used-only dealer license: For selling only used cars
• Motorcycle dealer license: For selling only motorcycles

2. Fulfill the Prerequisites 

To qualify for a dealer's license in Illinois, you must fulfill the following general requirements:

• Be at least 18 years old
• Possess a valid Illinois driver's license
• Establish a permanent place of business with a physical location
• Obtain a sales tax permit from the Illinois Department of Revenue
• Register your business with the Illinois Secretary of State

3. Obtain a Permanent Business Location

Ensure your business location complies with Illinois regulations. The premises must have a designated office space and display area, fulfill zoning requirements, and possess the necessary facilities for storing and maintaining vehicles.

4. Complete the Pre-Licensing Education Course 

Illinois mandates that all prospective dealers complete a pre-licensing education course. Completion of the course demonstrates your understanding of the industry and your commitment to operating within legal and ethical boundaries. The course is eight hours long and is provided by the Illinois Secretary of State’s office.

5. Secure a Surety Bond

To protect consumers, Illinois requires all dealers to obtain a surety bond. The bond amount varies depending on the type of license and the number of vehicles sold annually. Currently, the bond requirement is $50,000. Work with a reputable bonding agency to obtain the necessary bond.

7. Obtain Proof of Liability Insurance

In order to become a licensed dealer in Illinois, liability insurance is an absolute requirement. Your insurance policy must meet the minimum amounts of coverage: $100,000 for bodily injury, $300,000 for each accident, $50,000 for property damage. The insurance must not expire before Dec. 31. 

8. Submit the License Application & Fees

Gather the required documents for your license application and pay the required fees, including:

• Completed application form provided by the Illinois Secretary of State's office
• Proof of completion of the pre-licensing education course
• Proof of a permanent business location, including lease or ownership documents
• Notice of proper zoning form
• Proof of insurance coverage
• Sales tax permit from the Illinois Department of Revenue
• Surety bond documentation
• Criminal background check verification (typically a receipt from a state approved vendor)

These are the fees associated with the process:

• Certification of authority annual fee: $1000 ($500 for a first application between June 15 and December 31)
• Master plates annual fee: $45
• Duplicate plates: $13 

Your application, required documents, and fees must be mailed to the Illinois Vehicle Service Department at the following address: 

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

9. Pass Background Checks & Inspections

As part of the application process, you and any key personnel associated with the dealership will undergo a criminal background check. Ensure all individuals have clean records to avoid any delays or denials. Additionally, the Secretary of State's office will conduct inspections to verify that your business location meets the necessary requirements.

It's critical to adhere to the state of Illinois’ regulations and provide accurate information throughout the process. By following this step-by-step guide and working closely with the Illinois Vehicle Service Department, you'll be well-prepared to obtain your dealer's license and launch your dealership, complying with the legal framework in the state of Illinois.

This is not intended as legal advice. If you have questions about dealer licensing requirements, please seek the assistance of legal counsel.

Unlock the Benefits of ACV Auctions Membership With Your Illinois Dealer License

ACV Auctions can help you source inventory in Illinois when you become a dealer. Spanning from Chicago to Springfield and every place in between, we have inventory from all over Illinois. What's better if you need specific inventory you can’t find in Illinois, you can always broaden your search filters to find inventory nationwide. 

After obtaining your Illinois Dealer License, sign up with ACV. Enjoy the benefits of a low buy fees, and leverage our transparent vehicle condition reports that empower dealers to bid on inventory with confidence.

Sources

Bryant, T. (2023b, March 30). How To Get Your Illinois Dealer License: All You Need to Know. Surety Bonds Blog. https://www.bryantsuretybonds.com/blog/getting-an-illinois-dealer-license 

Dealer licensing requirements. Illinois Automobile Dealers Association. (n.d.-a). https://illinoisdealers.com/dealer-licensing-requirements/ 

Illinois Auto Dealer License Guide. How to Get an Illinois Auto Dealer License | JW Surety Bonds. (n.d.). https://www.jwsuretybonds.com/states/illinois/auto-dealer-license#:~:text=Submit%20your%20application%20form%2C%20along,Master%20plates%20annual%20fee%3A%20%2445