Car loan denied; can dealer charge restocking and mileage fees?

September 24, 2014 23:30 by Consumer Ed

Dear Consumer Ed:

Is it legal for a car lot to charge a re-stocking fee and 50 cents per mile on a car because the loan was not approved?           

Consumer Ed says: 

It sounds like you entered into a conditional sales agreement known as a “spot delivery” transaction.  With spot delivery, the buyer takes possession of the vehicle “on the spot,” upon making a commitment to finance the vehicle, but not yet having a definite arrangement for financing with a bank or finance company.  It would appear that you negotiated loan terms with the dealership and agreed to buy the car only if a lender agreed to finance the deal according to those terms.   The car remains the property of the dealership until a lender finances the deal.  Since the dealership was not able to find a lender to finance your deal, the dealership may be entitled to order you to return the car and to pay for its temporary use.

The amount that you may be charged for using the car depends on the agreement you signed prior to taking the car off of the lot.  Dealers who offer spot delivery usually require potential buyers to sign a “bailment agreement” outlining what would happen if the dealer was unable to secure financing with a bank or finance company.  If you signed a bailment agreement, and if it includes a reasonable restocking fee and per-mile fee, then these fees are likely legal.

However, even if the fees are legal, the dealer could still be in violation of the Georgia Department of Law’s Consumer Protection Unit’s Auto Advertising and Sales Practices Enforcement Policies.  For example, if the dealer represented that you had been approved by a prospective lender prior to your purchasing the vehicle, it would be unfair and deceptive for the dealer to require you to return the vehicle for an alleged failure to obtain lender approval. In that event, the dealership should also return any down payment you made on the vehicle if you are denied credit approval and choose not to pursue any other financing options.

You have additional rights if you traded in a vehicle as part of your transaction.  First, the dealer should have retained both title and possession of any such vehicle until financing is actually approved.  Second, if you choose not to execute another finance agreement for the purchase of your vehicle, the lot must immediately return your old vehicle to you.  If you believe the car lot engaged in any of these prohibited practices, you may file a complaint with the Georgia Department of Law’s Consumer Protection Unit by visiting, or calling 404-651-8600.

To avoid this situation in the future:

  • Prepare in advance.  Shop for financing as you shop for a vehicle.  Ideally, arrange for financing ahead of time through your bank or credit union so you know the amount of money you can borrow.  At least contact them to find out what interest rate you would qualify for, so you can compare this with the dealer’s financing offer.
  • Read through all documents thoroughly before you sign. If there are any blanks left in the contract, you and the dealer should complete them before you sign.  Ask questions if there are items you don’t understand.
  • Get everything in writing. Insist in advance on a written assurance that if your financing should fall through, your deposit and your trade-in will be returned to you; or, if credit terms change, you may cancel the deal.
  • Wait until financing has been approved.  If you do work with the dealer to secure financing, seriously consider waiting until financing has been approved before you take possession of the vehicle.

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As a Tennessee resident, do I have to pay GA sales tax on a car purchased in Georgia?

August 14, 2014 18:20 by Consumer Ed

Dear Consumer Ed:

I'm looking to buy a used car in Georgia, but I live in Tennessee. What is the law for collecting sales tax? I've been told Georgia dealers won't collect sales tax. I’ve also heard that if I pay cash, they won't collect sales tax, but if I finance it, they will collect my Tennessee tax and mail it to Tennessee. The Georgia Secretary of State said by law the dealer must collect Georgia sales tax and I may also have to pay Tennessee sales tax. Is it up to the dealer?

Consumer Ed says: 

The decision to collect Georgia taxes on the purchase of your vehicle is not in the dealer’s discretion. Instead, it depends on whether you apply for certificate of title in Georgia or another state (like Tennessee).  On March 1, 2013, Georgia’s motor vehicle tax rules changed:  as of that date, instead of the old sales tax, use tax, and annual ad valorem taxes being levied, any car purchased or leased and then titled in Georgia will instead be subject to a one-time tax called the Title Ad Valorem Tax fee (“TAVT”).  The TAVT is now the sole and exclusive method for taxing the purchase price of an automobile.  The TAVT is calculated by multiplying the Fair Market Value of the vehicle by the TAVT rate, which is currently set at 6.75% through the end of 2014.  The new law requires dealers to collect this TAVT from the customer, then submit the TAVT and the application for certificate of title to the particular county in Georgia where the vehicle will be registered.

But if you purchase a vehicle in Georgia and apply for certificate of title in another state, the dealer may not necessarily collect sales tax, use tax, or even TAVT on your behalf.  Instead, the dealer may have the purchaser execute a Nonresident Certificate of Exemption Purchase of Motor Vehicle (also referred to as Form ST-8), to allow for a “drive out” exemption.  This certificate is signed by both the purchaser and the dealer to affirm that the nonresident purchaser will immediately transport the vehicle out of Georgia and apply for title in his/her state of residence.  There are circumstances, however, particularly with financed transactions, where the dealer may collect and remit taxes on your behalf. Regardless, nonresidents won’t pay TAVT or Georgia sales tax, but will be subject to the taxing rules and policies of their home state when they apply for a certificate of title and register their vehicle in that state.

Keep in mind that if you later become a Georgia resident, you’ll be required to pay the TAVT on your vehicle.  This is because new residents moving into Georgia are required to register and title their motor vehicle in Georgia, which is when the TAVT is charged.  According to the new motor vehicle tax rules, new residents must pay 50% of the TAVT within 30 days of moving to the state, and the remaining 50% must be paid within the next 12 months.

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Seller sold me a vehicle that would not pass emissions; what are my rights?

June 4, 2014 22:09 by Consumer Ed

Dear Consumer Ed:

I purchased a vehicle from a private seller that had currently not passed emissions testing. When I asked the seller at the point of sale about the vehicle passing emissions, he stated that the car was in passing order. When the vehicle subsequently failed the emissions test, I contacted the seller about returning my money or paying for the repairs needed to pass emissions, but he refused. I don't know if I have rights in the state of Georgia concerning this, and have no idea who to get in touch with or how to file a complaint or possibly get my money back.

Consumer Ed Says:

In Georgia, all sellers of gas-powered cars and light-duty trucks (those with a gross vehicle weight rating or GVWR of 8,500 pounds or less) must sell a vehicle with a current, valid, passing emissions inspection if the seller is located in one of the 13 counties comprising the Atlanta metro area -- Cherokee, Clayton, Cobb, Coweta, DeKalb, Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Paulding or Rockdale -- and if the vehicle will be registered in that 13-county region.

If the seller is not located in one of these metro-Atlanta counties, then the vehicle being sold is not required to have an emissions certificate. This is not usually a problem, however, since an emissions certificate is not required in order to register your vehicle outside of metro-Atlanta.

However, if the seller and the vehicle registration location are in one of the 13 metro-Atlanta counties specified above, it is the seller's responsibility to provide evidence of a passing emissions inspection. The unexpired Certificate of Emissions Inspection should be displayed on the vehicle at the time of sale. If the seller is required to sell the vehicle with an emissions inspection but fails to display a valid, unexpired certificate at the time of sale, the seller may be guilty of a misdemeanor and can be fined $100.00 for the first offense, $500.00 for the second offense, and $1,000.00 for each subsequent offense.

There are a few exceptions (see below), but this law applies regardless of whether the seller is a private party, dealership or auctioneer. Also, cars sold "as is" are not exempt-they too must be sold with a current, valid, passing emissions inspection if the seller is located in one of the 13 metro Atlanta counties indicated above.

However, the seller is not required to provide the buyer with a copy of the Vehicle Inspection Report (VIR), which is generated during the inspection and gets reported electronically to Georgia tag offices. So before purchasing a vehicle, potential buyers should always look for the Certificate of Emissions Inspection on the vehicle and check the vehicle's VIR before purchasing. Simply ask the seller for it or, if you know the vehicle identification number (VIN), you can download a copy of a vehicle's most recent VIR for free on the Georgia Clean Air Force (GCAF) website by visiting:

If you bought a vehicle in metro-Atlanta that does not have a current passing emissions inspection, you have several options:



Exceptions & Exemptions 

There are a few exceptions and exemptions to this law. An emissions inspection is not required if:  


  • The vehicle runs only on alternate fuel or diesel;
  • The vehicle has a GVWR over 8,500 pounds;
  • The vehicle is from the three most recent model years (for example, in 2014 that means vehicles of model years 2012, 2013, or 2014);
  • The vehicle is 25 model years old or older; or
  • The vehicle was sold as "parts only" or "salvage" and the title was appropriately identified as such with the Department of Revenue, Motor Vehicle Division.


Senior Exemption: If  you are a senior citizen selling your vehicle you may qualify for an exemption if you are at least 65 years old, your vehicle is 10 model years old or older, you do not drive the vehicle over 5,000 miles per year, the vehicle's odometer is in working condition, and you are the primary registered vehicle owner. However, you must apply for a Senior Exemption. You can print and mail in the completed form or submit it online by visiting  

Non-Conforming Status: Gray market vehicles, kit cars, hot rods, and vehicles for which the owner is unable to obtain parts (parts are no longer manufactured) to repair the vehicle so it can pass the emissions inspection may qualify for an exception. Owners of these types of vehicles would have to apply for Non-Conforming Status and each request is evaluated on a case-by-case basis. For more information on Non-Conforming Status and to apply online, visit:

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