Mechanic warranties on car repairs

May 7, 2013 17:53 by Consumer Ed

Dear Consumer Ed: 

I took my car to a mechanic for repairs. I chose the business based on an advertisement in a local magazine, which stated that there was a 6-month warranty on all engine jobs.  The car cost over $2200 to repair.  After I had the car for 3 weeks, it broke down. Now the shop states that they will fix it, but I will be charged for labor. Do I have any recourse in this situation?

Consumer Ed says: 

It depends on what the advertisement in the magazine actually stated about the warranty, and what terms were in your service agreement with the mechanic.  If the warranty only covered parts, then you would still have to pay for labor.  If the warranty covered parts and labor or just labor, then you shouldn’t have to pay for labor, and might have a breach of contract claim against the mechanic.  Even if you don’t have a clear breach of contract claim (for example, you didn’t have a written service agreement, or the warranty terms in the agreement were ambiguous as to what was covered), you could still have a valid legal claim if the mechanic promised a warranty on labor in the advertisement.

If the advertisement about the warranty didn’t clearly say what it would cover, the mechanic may have engaged in an unfair and deceptive business practice, which is prohibited by Georgia’s Fair Business Practice Act (“FBPA”). In keeping with the FBPA, all advertisements should be in plain language, truthful and accurate, and free of express or implied claims that misrepresent or are otherwise deceptive.  Additionally, any necessary qualifying information must be clearly and conspicuously disclosed in the ad.  If you believe that the ad for the warranty was deceptive, you can submit a complaint to the Governor’s Office of Consumer Protection by calling 404-651-8600, or visiting our interactive website at www.consumer.ga.gov.

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Can you explain the new car tax?

April 23, 2013 22:58 by Consumer Ed

Dear Consumer Ed:

I’m confused about the new car tax.  If I sell my car to my sister, will she have to pay tax?

Consumer Ed says:  

For the answer to this question, we went to the Georgia Department of Revenue, for whose assistance we are most grateful.

Let’s look at the specifics about the tax before exploring whether your sister will have to pay the new tax.  It is called the title ad valorem tax (“TAVT”) and was passed by the 2012 Georgia General Assembly with additional amendments made during the recent 2013 legislative session.  It became effective on March 1, 2013, and, until December 31, 2013, the current TAVT rate is 6.5% multiplied by the “Fair Market Value” of the vehicle.  To determine the Fair Market Value of a new motor vehicle, use the greater of the retail selling price or the value listed in the Department of Revenue motor vehicle assessment manual. Then reduce that number by any rebate or cash discounts you received from the dealer. For a used vehicle, the Fair Market Value is the usually the amount listed in the Department of Revenue motor vehicle assessment manual.  Whether the motor vehicle is new or used, there is a reduction for the trade-in value before the TAVT is imposed when the vehicle is purchased at a dealership. 

With the new tax, vehicles purchased on or after March 1, 2013 and titled in Georgia are exempt from sales and use tax and the annual ad valorem tax, i.e. the “birthday tax”.  Instead, the purchased vehicles are subject to the new, one-time TAVT.  Vehicles purchased through a private sale (non-dealer sale) that were previously exempt from sales tax are now subject to the TAVT.  If you purchased the car between January 1, 2012 and March 1, 2013 and had the car titled in Georgia, you are eligible to opt in to the new TAVT system, which will allow you to avoid the annual ad valorem tax after you opt in.  If you qualify to opt in, you will get credit for any sales tax and ad valorem tax previously paid up to the amount of TAVT due.  However, if the sales tax and ad valorem tax previously paid is less than the TAVT due, you will need to make up the difference when you opt in.  This option may only be exercised through February 28, 2014.

Your sister, as an immediate family member, may or may not have to pay the TAVT when she purchases the car from you.  An "immediate family member" is defined as your spouse, parent, child, sibling, grandparent or grandchild.  It is very important to remember that both you and your sister will have to complete an affidavit affirming that you are immediate family members. 

For immediate family members who buy or inherit a vehicle, their obligation to pay the TAVT depends on whether you, as the former owner of the vehicle, have already paid the TAVT.  If you have not paid the TAVT and are paying annual ad valorem tax on the vehicle, your sister has two options: (1) continue to pay annual ad valorem tax on the vehicle, and therefore not be subject to the TAVT; or (2) your sister may elect, at the time she purchases your vehicle, to pay the TAVT based on the current Fair Market Value of the vehicle at the applicable rate for the current year (i.e. 6.5% of the Fair Market Value for 2013) On the other hand, if you were eligible to opt in to the new system and did opt in, or if you otherwise paid the TAVT when you first acquired the vehicle, then her TAVT rate will be 0.50% of the value of the car when she purchases it from you.

Don’t forget that vehicles subject to the TAVT are still subject to the $18 title application fee at the time the vehicle is titled.  Vehicle owners must also annually register their vehicles in their home county and pay the associated $20 renewal fee. 

For more information about the TAVT, visit the Motor Vehicle section of the Georgia Department of Revenue website at http://motor.etax.dor.ga.gov/motor/MVDOnline.aspx.

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Will co-signing a loan for my daughter affect my credit?

February 22, 2013 18:18 by Consumer Ed

Dear Consumer Ed:

My daughter wants me to co-sign a loan for a car. If she is late on a payment, will this affect my credit, as well as hers?

Consumer Ed says:

Yes, when you co-sign on a loan, of any kind, both you and the borrower put your credit scores at risk.  If your daughter is late or misses a payment, this fact will be reflected on your credit reports and may negatively affect your credit ratings.  Any late or missed payment will affect your daughter’s creditworthiness as well.
   
There are a number of other responsibilities and risks that you might want to consider before you agree to this co-sign arrangement.  First, you need to understand that cosigning a loan is the same as guaranteeing a debt.  This means that if your daughter does not pay her own debt, you will then have to make the payments for her.  Second, in most states, including Georgia, if the borrower misses a payment, the lender can immediately collect from you as the cosigner.  Therefore, you should carefully evaluate your own finances and only co-sign on the loan if you can afford to pay off the loan plus any potential late fees or collection costs associated with the account.  
   
It is very common for parents to cosign on a child’s loan.  Assuming your daughter pays at least the minimum due every month, this arrangement will help her establish or re-establish good credit.  As her parent, you are better equipped to evaluate whether your daughter is financially responsible and if the terms of the loan are an economically feasible undertaking for her. 

If you decide to cosign on her loan, you should then take appropriate steps to protect yourself and your credit as much as possible.  One way to do this is to try to limit the terms of your obligation.  For example, you can request a contract that states, “The cosigner will be responsible only for the principal balance on this loan at the time of default.”  The lender is not required to consent to your request, but may if asked. You could also ask the lender to agree, in writing, to notify you in the event you daughter ever misses a payment, prior to effecting collection.  Early notification will help you prevent any potential problem from escalating to the point where you would be asked to repay all at once the entire amount owed.  Finally, get copies of all of the important documents involved in the transaction from either the lender or the borrower—the loan contract, Truth-in-Lending Disclosure Statement, and warranty.

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