Used Car Dealer Gets What He Deserves! Print E-mail
Written by Kerry S. Doolittle   
Wednesday, 19 June 2002

Used car dealers, particularly the "buy here pay here" lots, often take not only unfair advantage but downright illegal advantage of unsuspecting customers. (Read my FAQ on interest rates and used cars.) Here is one case where the customer, with my help, fought back.

On June 7, 2002, I obtained a summary judgment against Paul Bullock d/b/a North Place Auto Sales (near Commerce, GA). My client had purchased a used car for $4,933.58, with a substantial down payment and weekly installment payments. After approximately 15 weeks, with $3,110.00 total paid including the down payment, the Dealer repossessed the vehicle on a Sunday because a payment due the previous Friday was late. His contract attempted to charge a stated rate of 28% interest.

I demanded that the dealer return the vehicle, which he refused. I then filed suit to rescind (terminate) the contract and recover damages for my client.

The Court agreed that the undisputed facts showed an illegal rate of interest, and that my client was entitled to a full refund of all monies paid. Furthermore, the Court agreed that the Dealer had violated Georgia's Motor Vehicle Sales Financing Act, and Georgia's Fair Business Practices Act. These violations not only create a civil remedy, but could lead to criminal prosecution of the Dealer.

The Court awarded my client a full refund plus civil penalties, exemplary damages, and attorney's fees, for a total judgment of $16,601.00. To read the actual judgment click on this PDF file name01-MV-669-J.

We still have to collect this judgment, and there is always the risk that the Dealer will file for bankruptcy protection, but because some elements of this award constitute punishment, there is a strong possibility that the Dealer will not be able to discharge (avoid) the debt through bankruptcy.

This case should serve as an example to others who are having trouble with a used car dealer, and a warning to dealers. Both need to learn the law and abide by it.

To learn more about used car dealers and your rights, go to FAQ and follow the links.

UPDATE JULY 25, 2002: The dealer hired a new attorney and filed an appeal. The new attorney contends that the 17% maximum rate is calculated as an "add-on" rate, meaning that the maximum amount of interest that can be charged is determined by multiplying the entire debt x 17% x the number of years in the term. This "add-on" method is not directly mentioned in the statute, but there are some mentions of it in a few cases. It results in the actual (or effective) rate of interest being considerably higher because it is counting interest on the entire debt for the entire term despite the fact that the debt is being reduced over the term as payments are made on schedule.

The add-on method of interest calculation is inherently deceptive, and in my opinion has no place in a consumer protection statute. We shall have to wait and see what the appellate court does with this case.

Check Back for Updates.

July 16, 2003 Update: The used car dealer claimed that he had no money, and made an offer to settle for a modest sum. The client chose to settle rather than face the arduous task of collecting the judgment.

The case is now concluded.

Last Updated ( Tuesday, 08 April 2008 )
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