How to Get a Used Car Dealers License in Illinois

Thinking about opening a car dealership in Illinois? This guide simplifies the licensing process for new and used car dealers, motorcycles included. Follow these steps to ensure your business operates legally and smoothly from the start.

Illinois has different types of dealer licenses. These include new, used, wholesale, and auction dealer licenses. To get a license in this state, you must be 18 or older, have an Illinois driver’s license, and set up a permanent business location. You also need a sales tax permit, and the business must be registered with the state. Meeting these requirements prepares you for your license application.

It’s important to note that renting or borrowing a car dealer license is illegal in Illinois and nationwide. Such practices are not legitimate and can lead to severe legal consequences. By adhering to these guidelines, you can set up a legally compliant and successful car dealership in Illinois.

Key Takeaways

  • Illinois offers various types of dealer licenses, including new, used, wholesale, and auction.
  • To qualify for a dealer’s license, you must meet age and driver’s license requirements, establish a permanent business location, and obtain necessary permits and registrations.
  • The used car dealer’s license application process involves securing a surety bond, obtaining liability insurance, completing a pre-licensing education course, and passing background checks and inspections.
  • Understanding the license requirements and navigating the step-by-step process is crucial for successfully launching your used car dealership in Illinois.
  • Compliance with state regulations, such as minimum insurance coverage and annual fees, is essential for maintaining your dealer’s license in Illinois.

8 Steps to Getting Your Illinois Dealer License 

1. Choose Your License Type

Illinois offers various dealer licenses. Decide if you’ll sell new cars only (franchise dealer), both new and used (new and used car license), or just used vehicles (used-only dealer license). There’s even a separate license for motorcycles.

2. Fulfill the Basic Requirements or Prerequisites

To qualify, you must be 18 or older, have a valid Illinois driver’s license, and have a permanent business location. Register your business with the state and obtain a sales tax permit.

3. Secure a Permanent Business Location

Having a compliant business location is key for a used car dealer’s license in Illinois. This location needs an office, a display area, and must meet zoning rules. It should also have space for storing and working on cars. Finding a spot that checks all these boxes is crucial for moving forward.

Your business must have a clear office, apart from where cars are shown. This office needs the right tools for running the business, like desks and computers. The area for showing cars must follow local rules and be big enough for your stock.

Next, your dealership needs areas for car storage and work. You must have a safe place to keep the cars and a spot for fixing them. These places should be well-kept to ensure the cars are in good shape for customers.

Getting a business location that fits Illinois’ rules is very important. It helps your application process go smoothly. Making sure your space meets these standards early on helps you avoid problems later.

4. Complete the Pre-Licensing Course

In Illinois, if you want to sell used cars, you must take a special class. This course is created by the Illinois Secretary of State’s office. It lasts for eight hours. You learn a lot about running a dealership. For example, you learn about getting a license, taxes, and laws that protect customers. By finishing this course, you show that you know the business. It proves you want to do things the right way.

Course RequirementDetails
Duration8 hours
Topics CoveredLicensure requirements, applicable taxes, consumer protection laws
PurposeDemonstrate understanding of the industry and commitment to ethical operations

5. Acquire a Surety Bond

To protect consumers, Illinois mandates all dealers to acquire a surety bond. The bond amount varies depending on your license type and the number of vehicles you sell annually. You can get the bond through a reputable bonding agency.

6. Obtain Proof of Liability Insurance

You’ll need liability insurance to become a licensed dealer in Illinois. The policy must meet minimum coverage requirements: $100,000 for bodily injury, $300,000 per accident, and $50,000 for property damage. The insurance must be valid until Dec. 31st of that year.

7. Submit Your Application & Fees

Required Documents

The documents needed for a used car dealer’s license in Illinois tell the state about your business. This include:

  • Completed application form
  • Proof of completion of the 8-hour pre-licensing education course
  • Documentation of your permanent business location, including proof of ownership or lease
  • Proof of liability insurance coverage meeting the state’s minimum requirements
  • Copy of your sales tax permit from the Illinois Department of Revenue
  • Documentation for surety bond

Application Fees

Getting a license includes paying some fees. You’ll owe $1,000 as an annual fee. If this is your first application between June 15 and December 31, it’s $500. There’s also a $45 charge for the master plates and a $13 fee for the duplicate plates. Don’t forget to send this money with your application and documents.

Mailing the Application

After you’ve gathered everything and paid the fees, it’s time to send your application. Address it to the Illinois Vehicle Service Department. They will process your application. This is the last step to becoming a used car dealer in Illinois.

8. Pass Background Checks & Inspections

As part of the process, you and your key dealership personnel will undergo background checks. Ensure everyone has a clean record to avoid delays or application denials. The Secretary of State’s office will also conduct inspections to verify your business location meets all requirements.

Criminal Background Check

The Illinois Secretary of State’s office and State Police will do these checks. Contact them at 1(815)740-5160. Start the process to meet Illinois’ license background check requirement.

Business Location Inspection

The Illinois Secretary of State’s office also inspects your business location. It checks that it meets the conditions for a used car dealer’s license. You need the right office space, area for displaying cars, and places to keep and fix them. This needs to follow Illinois’ guidelines for used car dealer business locations.

Understanding the Types of Car Dealer Licenses in Illinois

Illinois has various dealer licenses for different types of car businesses. It’s vital for potential dealers to know their options. This helps them choose the right license for their business.

Franchise Dealer License

A Franchise Dealer License is for selling new vehicles. It lets dealers sell new cars, trucks, and SUVs from authorized makers. They follow special rules from these companies.

New and Used Car License

The New and Used Car License is very common. It lets dealers sell both new and used vehicles. This means they can meet the demands of customers looking for new or pre-owned cars.

Used-Only Dealer License

Dealers focusing only on used cars should get a Used-Only Dealer License. With this, they can only sell used vehicles. It allows them to concentrate on the used car market.

Motorcycle Dealer License

The Motorcycle Dealer License is for selling motorcycles and scooters. It covers the special rules for selling these vehicles in Illinois.

Examining Illinois’s car dealer licenses helps new owners choose well. They can pick the license that matches their business and goals.


Getting a used car dealer’s license in Illinois is a detailed process. Yet, using the guide provided, you can overcome these steps successfully. You must know the license types, find a business location, go through an education course, get insurance, post a bond, and handle background checks and inspections. Each step is crucial for a legal and efficient operation of your dealership.

It is important to work closely with the Illinois Vehicle Service Department. This ensures a smoother start in the used car sales world. The guide’s conclusion highlights the important tasks you must complete. It gives you a roadmap to achieve your business dreams in the auto industry.

By preparing well and meeting Illinois’ requirements for a car dealer’s license, you set your business up for success. This step-by-step guide is key to your journey. It will guide you in getting your license and starting an exciting phase in your career.

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What are the different types of dealer licenses available in Illinois?

Illinois provides a range of dealer licenses. These include licenses for new car sales (Franchise Dealer License), both new and used vehicles (New and Used Car License), and only for used cars (Used-Only Dealer License). They also have a license specific for selling motorcycles (Motorcycle Dealer License).

What are the requirements to qualify for a dealer’s license in Illinois?

To get a dealer’s license in Illinois, you need to be at least 18. You must have a valid Illinois driver’s license and set up a fixed business place. Also, you need a sales tax permit and to register your business with the Illinois Secretary of State.

What are the requirements for a permanent business location for a used car dealer in Illinois?

Your business place needs specific areas. This includes an office, an area to show vehicles, and a location to keep and work on cars. Also, it must meet all local laws regarding its use.

What is the pre-licensing education course requirement for used car dealers in Illinois?

All wishing used car dealers in Illinois must finish an 8-hour education course. This course, provided by the Illinois Secretary of the State, covers various topics. These include the laws, taxes, and how to protect consumers.

What insurance and surety bond requirements must be met to obtain a used car dealer’s license in Illinois?

To get your license, you’ll need a $50,000 surety bond. You also need insurance with enough coverage. This coverage should be at least $100,000 for injuries, $300,000 for accidents, and $50,000 for things damaged.

What are the required documents and fees for the used car dealer license application in Illinois?

When applying for a license, you must submit various documents. These include a filled application form, education course records, proof of your business place, insurance evidence, among others. Fees include a $1,000 charge for each year, a $45 for special dealer plates, and a $13 fee for any extra plates.

What are the background checks and inspections required for obtaining a used car dealer’s license in Illinois?

During your application, the government will check both your background and that of anyone important in your business. The Illinois Secretary of State will also come and check your business place. They want to make sure it has everything legally required, like a proper office and enough space for cars.