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New bond requirements part of annual Illinois dealer license

November 3, 2017
With mailed notices to renew their Illinois licenses now arriving, Illinois dealers are finding that the new surety bond requirement for 2018 increases from $20,000 to $50,000. The bond is required for each location at which a business operates.
Under the amended law, which takes effect Jan. 1, all new- and used-vehicle dealers also must comply with conditions of the bond requirement for a period of 60 consecutive months before they shall be exempt from any further bond requirements under the provisions. The current period is 36 consecutive months.
The legislation, Senate Bill 1556, was introduced in February and received no "nay" votes on its way to Gov. Bruce Rauner’s signature in August.
For dealers getting licensed and bonded before the end of 2017, it is recommended that they request the higher bond amount, to avoid having to obtain a bond rider after Jan. 1.
Even though dealers must obtain a higher bond amount, the bond premium doesn’t necessarily need to be much greater than a dealer’s current premium; better credit scores and few outstanding payments can present a dealer as a more stable bond applicant and significantly decrease the price to pay to get bonded.
Because the premium for vehicle dealer bonds and remittance agent bonds is determined as a rate and not an exact figure, it most likely will increase along with the amount of the bond. Therefore, for a dealership that currently pays a 1 percent rate on its $20,000 bond, its $200 premium likely will become a $500 premium for a $50,000 bond, because the rate on the bond remains 1 percent.
 
 

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