Illinois Auto Dealer Bonds
Surety Bond Professionals is a family-owned and operated bonding agency with over 30 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all your Illinois auto dealer bond needs.
What Are They?
Illinois auto dealer bonds are categorized as a type of license and permit bond because purchasing one is a prerequisite for becoming licensed as an Illinois auto dealer. They serve three important purposes:
- They guarantee that Illinois auto dealers operate in full compliance with state law.
- They protect both the state of Illinois and Illinois consumers against financial loss resulting from the unlawful or unethical sales practices of auto dealers throughout the state.
- They provide funds for compensating the state or individuals who are harmed financially by a dealer’s violation of state law or the terms of an Illinois auto dealer bond.
Who Needs Them?
If you’re applying for a new auto dealer license anywhere in Illinois, you will need to purchase a $50,000 Illinois auto dealer bond as part of the licensing process. Other states require auto dealers to have an auto dealer bond in force at all times to prevent license suspension or revocation. However, in Illinois, that applies only for the first 36 months that a dealer is in business. After that point, auto dealers are no longer subject to a bonding requirement.
All Illinois auto dealer licenses and bonds expire on December 31 of each year.
Speak with a Surety Bond Professionals agent today to discuss your bonding needs.
How Do They Work?
There are three parties to every Illinois auto dealer bond:
- The entity that licenses auto dealers, the Illinois Secretary of State, is the “obligee” requiring the bond.
- The auto dealer is the “principal” required to purchase the bond.
- The surety company that underwrites and approves the bond is the “surety.”
The terms of an Illinois auto dealer bond specify what statutes the principal must abide by to avoid claims against the bond. They also make the principal legally responsible for paying all valid claims.
The surety typically pays any valid claim on behalf of the principal. That advance payment acts as a line of credit extended to the principal that must be repaid to the surety.
What Do They Cost?
The premium for an Illinois auto dealer bond is a small percentage of the required $50,000 bond amount. The surety will determine the premium rate for a given principal based primarily on the principal’s credit score. That’s because the surety is taking on a certain amount of risk in extending credit to the principal.
A principal with good credit who qualifies for the standard market rate will pay a premium rate in the range of 1% to 2%. A principal with lesser credit may pay a higher premium rate.
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Our surety bond professionals will get you the Illinois auto dealer bond you need at a competitive rate.