Class 1. Any new motor vehicle designated by the manufacturer by a year model not earlier than the year in which the sale is made and all vehicles not previously titled - $10.00 per $100.00 per year.
Class 2. Any new motor vehicle not in Class 1 and any used motor vehicle designated by the manufacturer by a year model of the same or not more than two years prior to the year in which the sale is made - $13.00 per $100.00 per year.
Class 3. Any used motor vehicle not in Class 2 and designated by the manufacturer by a year model not more than four years prior to the year in which the sale is made - $15.00 per $100.00 per year.
Class 4. Any used motor vehicle not in Class 2 or Class 3 and designated by the manufacturer by a year model more than four years prior to the year in which the sale is made - $17.00 per $100.00 per year.
(Ga. L. 1967, p. 674, § 4; Ga. L. 1970, p. 101, § 3; Ga. L. 1980, p. 523, §§ 1, 2, 5; Ga. L. 1981, p. 703, § 1; Ga. L. 1985, p. 698, § 2; Ga. L. 2000, p. 136, § 10.)
Cross references.- Inapplicability of section to retail installment contracts pertaining to any manufactured home with a cash sale price of more than $3,000, § 7-4-3.
Code Commission notes.- Subsection (a) of this Code section was amended by Ga. L. 1980, p. 523, § 1 to increase Class 1 and 2 rates from $8.00 per $100.00 and $11.00 per $100.00 to $10.00 per $100.00 and $13.00 per $100.00, respectively, and to make Class 1 applicable to all vehicles not previously registered. Section 5 of the 1980 Act provided for the repeal of this amendment on July 1, 1981, but § 5 was in turn repealed by Ga. L. 1981, p. 703, § 1, effective April 7, 1981. Thus, the language of subsection (a) of this Code section correctly reflects the Ga. L. 1980, p. 523, § 1 amendment.
U.S. Code.- Title I of the Consumer Credit Protection Act, referred to in subsection (b) of this Code section, is codified as 15 U.S.C. § 1601 et seq.
Title V of the Consumer Credit Protection Act, referred to in subsection (b) of this Code section, appears as various sections throughout 15 U.S.C.
Law reviews.- For article surveying Georgia cases in the area of commercial law from June 1979 through May 1980, see 32 Mercer L. Rev. 11 (1980). For article, "Bankruptcy Jurisdiction Under the 1984 Amendments: One Step Backward, One Step Forward," see 3 Bank. Dev. J. 127 (1986). For note discussing impact of federal truth-in-lending legislation on state law, see 12 Ga. L. Rev. 814 (1978).
JUDICIAL DECISIONSANALYSIS
General Consideration
"Year" construed.
- The term "year" in O.C.G.A. § 10-1-33 refers to "calendar year" rather than "model year." Lee v. National Bank & Trust Co., 153 Ga. App. 656, 266 S.E.2d 315 (1980).
Construction of "any person" and "the person committing the violation."
- In pari materia with O.C.G.A. § 10-1-33, the language "any person" and "the person committing the violation" found in subsections (a) and (c) of O.C.G.A. § 10-1-38 refers only to the seller or holder and was not intended to expand the class of persons liable for usury violations. This is emphasized by § 10-1-38(d), which provides that if a violation is corrected within ten days after execution of the contract "neither the seller nor the holder is subject to any penalty under this Code section." Tollett v. Green Tree Acceptance, Inc., 190 Ga. App. 295, 379 S.E.2d 2 (1989).
Retroactivity of subsection (d).
- O.C.G.A. § 10-1-36.1, added to Georgia Motor Vehicles Sales Finance Act in 1985, expresses an intent by the General Assembly that neither the 1983 amendment of O.C.G.A. § 7-4-3, nor the addition of new subsection (d) to O.C.G.A. § 10-1-33 in 1985 (assuming it did apply to mobile home loans) was intended to apply retroactively. Southern Guar. Corp. v. Doyle, 256 Ga. 790, 353 S.E.2d 510, cert. denied, 484 U.S. 926, 108 S. Ct. 289, 98 L. Ed. 2d 249 (1987).
Subsection (d) of O.C.G.A. § 10-1-33, which abolishes the interest limit for motor vehicle installment sales contracts in excess of $5,000, is not applicable to a refinancing agreement dated prior to the effective date of O.C.G.A. § 10-1-33. Parten v. GMAC, 187 Ga. App. 516, 370 S.E.2d 778 (1988).
Mobile home loans.
- "Motor vehicle" loans are defined to include mobile home loans, but O.C.G.A. § 10-1-33 does not apply to other types of home loans or mortgages. Doyle v. Southern Guar. Corp., 795 F.2d 907 (11th Cir. 1986), cert. denied, 484 U.S. 926, 108 S. Ct. 289, 98 L. Ed. 2d 249 (1987).
Mobile home installment sales contracts.
- Since the General Assembly, beginning in 1983, has distinguished between mobile home loans and motor vehicle loans, and since O.C.G.A. § 7-4-3(a)(1) and (b)(1), as amended in 1983, deal specifically with mobile home installment sales contracts, whereas subsection (d) of O.C.G.A. § 10-1-33, as amended in 1985, does not, § 7-4-3(a)(1) and (b)(1) express the controlling legislation and legislative intent on mobile home installment sales contracts in excess of $3,000. Southern Guar. Corp. v. Doyle, 256 Ga. 790, 353 S.E.2d 510, cert. denied, 484 U.S. 926, 108 S. Ct. 289, 98 L. Ed. 2d 249 (1987).
Cited in Holden v. Peoples, Inc., 122 Ga. App. 269, 176 S.E.2d 516 (1970); Leach v. Midland-Guardian Co., 127 Ga. App. 562, 194 S.E.2d 260 (1972); Smith v. Society Nat'l Bank, 141 Ga. App. 19, 232 S.E.2d 367 (1977); Jordan v. Ford Motor Credit Co., 141 Ga. App. 280, 233 S.E.2d 256 (1977); Green v. Ford Motor Credit Co., 146 Ga. App. 531, 246 S.E.2d 721 (1978); Parker v. George Thompson Ford, Inc., 83 F.R.D. 378 (N.D. Ga. 1979); Green v. Citizens & S. Bank, 153 Ga. App. 342, 265 S.E.2d 286 (1980); Ford Motor Credit Co. v. Spann, 153 Ga. App. 535, 265 S.E.2d 863 (1980); Chrysler Credit Corp. v. Cooper, 7 Bankr. 537 (N.D. Ga. 1980); Kelly v. Sylvan Motors, Inc., 160 Ga. App. 420, 287 S.E.2d 359 (1981); Chrysler Credit Corp. v. Cooper, 11 Bankr. 391 (Bankr. N.D. Ga. 1981); Stewart v. Ford Motor Credit Co., 685 F.2d 391 (11th Cir. 1982); Gibbs v. Green Tree Acceptance, Inc., 188 Ga. App. 633, 373 S.E.2d 637 (1988); Cowan v. Miles Rich Chrysler-Plymouth, 885 F.2d 801 (11th Cir. 1989); Purser Truck Sales, Inc. v. Patrick, 201 Ga. App. 119, 410 S.E.2d 335 (1991).
Finance Charges
Finance charge is figured as percentage of unpaid (principal) balance.
- The term "principal balance" in the original Motor Vehicle Sales Act has been changed to "unpaid balance" in subsection (b) of O.C.G.A. § 10-1-33, as used in § 226.8(c), Regulation Z, relating to the Truth in Lending Act as therein set out. Both terms refer to the same thing - that is, the balance arrived at by deducting from the cash price any down payment made and adding to that sum all other authorized charges and expenses except the finance charge itself. The finance charge is then figured as a given percentage of this unpaid (principal) balance per year throughout the lifetime of the installment payments. Pike v. Universal C.I.T. Credit Corp., 125 Ga. App. 83, 186 S.E.2d 482 (1971).
Unpaid balance may include insurance costs and other charges.
- Insurance costs and other authorized charges are properly included in the "unpaid balance" and subject to the finance charge. Pitts v. Peoples Loan & Fin. Corp., 135 Ga. App. 38, 217 S.E.2d 181 (1975); Busby v. Sea Island Bank, 151 Ga. App. 412, 260 S.E.2d 485 (1979).
Acceleration clauses are not per se unenforceable. Barrett v. Vernie Jones Ford, Inc., 395 F. Supp. 904 (N.D. Ga. 1975), rev'd on other grounds sub nom., McDaniel v. Fulton Nat'l Bank, 543 F.2d 568 (5th Cir. 1976), aff'd, 578 F.2d 1185 (5th Cir. 1978).
Collection of unearned interest is not per se improper under Georgia law. Barrett v. Vernie Jones Ford, Inc., 395 F. Supp. 904 (N.D. Ga. 1975), rev'd on other grounds sub nom., McDaniel v. Fulton Nat'l Bank, 543 F.2d 568 (5th Cir. 1976), aff'd, 578 F.2d 1185 (5th Cir. 1978).
If an acceleration of unearned interest causes a note to become usurious, then there is a violation of the usury provision of Ga. L. 1967, p. 674, § 4, and, thus, under Ga. L. 1967, p. 674, § 8, the creditor is barred from recovering any finance charge, delinquency, or collection charge on the contract. McDaniel v. Fulton Nat'l Bank, 395 F. Supp. 422 (N.D. Ga. 1974), rev'd on other grounds, 543 F.2d 568 (5th Cir. 1976).
Acceleration without credit for unearned rates.
- Plaintiff's acceleration under the contract, followed by the filing of the plaintiff's petition for a writ of possession seeking recovery of a balance due, without deducting therefrom unearned rates that would have been earned except for acceleration, amounted to a "charge" by the seller in violation of O.C.G.A. § 10-1-33. Bozeman v. Tifton Fed. Sav. & Loan Ass'n, 164 Ga. App. 260, 297 S.E.2d 49 (1982).
In computing the accelerated balance on an installment sales contract in a petition for a writ of possession of mobile homes sold under the contract, the contract assignee's initial failure to rebate any unearned interest and subsequent rebating of such charges according to the Rule of 78's method violated O.C.G.A Art. 2, Ch. 1, T. 10. Carter v. First Fed. Sav. & Loan Ass'n, 179 Ga. App. 532, 347 S.E.2d 264 (1986).
Rebate of unearned finance charges on a monthly basis is harmonious with the provisions of O.C.G.A. Art. 2, Ch. 1, T. 10. Fitch v. GMAC, 181 Ga. App. 7, 351 S.E.2d 215 (1986).
Application of Rule of 78.
- In cases of acceleration of contracts under the Motor Vehicle Sales Finance Act, O.C.G.A. § 10-1-30 et seq., any refund credit for unearned finance charges may not be calculated under the Rule of 78. Bozeman v. Tifton Fed. Sav. & Loan Ass'n, 164 Ga. App. 260, 297 S.E.2d 49 (1982).
Creditor suing for deficiency cannot use "Rule of 78".
- The "Rule of 78" cannot be used to compute the interest refund in a suit for a deficiency balance resulting from a sale under an installment contract. Cook v. First Nat'l Bank, 130 Ga. App. 587, 203 S.E.2d 870 (1974).
Use of "Rule of 78" results in charging more interest than allowed.
- When the interest refund, calculated using the "Rule of 78," results in interest totaling two-thirds of the total amount being charged for a period of less than half the time of the note, this is in excess of the maximum allowable for the period in question on the unpaid balance to finance. Hence, a violation of subsection (a) of Ga. L. 1967, p. 674, § 4 is shown by the evidence. Under Ga. L. 1967, p. 674, § 8 this bars recovery of any finance charge, delinquency, or collection charge on the contract. Cook v. First Nat'l Bank, 130 Ga. App. 587, 203 S.E.2d 870 (1974).
Presumption that contract rate applied overcome.- Annual percentage rate of 22.55 percent should be applied to debtor's obligation to creditor since the creditor had overcome the presumption that the contract rate applied by showing that on a vehicle of the same age as debtor's vehicle, the creditor would obtain a 13 percent add-on rate. In re McMichen, 23 Bankr. 497 (Bankr. N.D. Ga. 1982).
Federal Law
1. FHA and VA
Overriding of FHA and VA provisions.
- Notwithstanding the inclusion of FHA and VA consumer protections, the lenders could not avail themselves of either preemption statute, since when the General Assembly amended O.C.G.A. § 10-1-33 in 1980 (raising the interest rate limit from 8 percent add-on to 10 percent add-on), it invoked other provisions of the FHA and VA preemption statutes which under certain circumstances permit the states to override the FHA and VA preemptions. Southern Guar. Corp. v. Doyle, 256 Ga. 790, 353 S.E.2d 510, cert. denied, 484 U.S. 926, 108 S. Ct. 289, 98 L. Ed. 2d 249 (1987).
Georgia overrode the FHA and VA preemptions when it amended its usury limit on mobile home transactions in 1980 and 1981, even though the amendments referred to neither the FHA/VA statutes nor to FHA/VA-insured loans. Doyle v. Southern Guar. Corp., 795 F.2d 907 (11th Cir. 1986), cert. denied, 484 U.S. 926, 108 S. Ct. 289, 98 L. Ed. 2d 249 (1987).
2. Depository Institutions Deregulation and Monetary Control Act
Lender may still qualify for federal preemption by complying with the Depository Institutions Deregulation and Monetary Control Act regulations unless, of course, the state has also overridden the DIDMCA preemption. Doyle v. Southern Guar. Corp., 795 F.2d 907 (11th Cir. 1986), cert. denied, 484 U.S. 926, 108 S. Ct. 289, 98 L. Ed. 2d 249 (1987).
Federal Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) was applicable, in that the transaction in question, entered into after March 31, 1980, and before the enactment of exempting state legislation, involved a federally related residential mortgage loan, made by a "creditor" as defined in DIDMCA and secured by a first lien on a residential manufactured home. Vickery v. Mobile Home Indus., Inc., 171 Ga. App. 566, 320 S.E.2d 633 (1984).
DIDMCA contracts not containing required protections.
- When lenders' mobile home contracts fell under § 501 of the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA), but it was undisputed that the contracts did not contain the consumer protections required by DIDMCA, DIDMCA did not exempt those contracts from O.C.G.A. § 10-1-33. Southern Guar. Corp. v. Doyle, 256 Ga. 790, 353 S.E.2d 510, cert. denied, 484 U.S. 926, 108 S. Ct. 289, 98 L. Ed. 2d 249 (1987).
3. Bankruptcy
Applicability to Ch. 13 bankruptcy plan.
- When debtor's car has value less than debt and debtor proposes to pay creditor under a Ch. 13 bankruptcy plan, it is not an arms-length consumer transaction in which the debtor is buying and financing a used car. Creditor is not entitled to receive maximum interest allowable under Georgia law in this context. In re Clements, 16 Bankr. 196 (Bankr. N.D. Ga. 1981).
Rate of interest of 22.75%, specified in a purchase-money motor vehicle contract, arguably steep given the rehabilitative nature of the subsequent bankruptcy proceeding, but less than the statutory maximum, and while containing an element of profit, was the rate applied, given the risks involved, in calculating the total amount of payments that the bankruptcy debtor had to make. In re Smith, 42 Bankr. 198 (Bankr. N.D. Ga. 1984).
Violation of O.C.G.A. 10-1-33
Violation forfeits charges.
- A violation of Ga. L. 1967, p. 674, § 4 invokes the penalty provisions of subsection (b) of Ga. L. 1967, p. 674, § 8 and results in forfeiture of "any finance charge, delinquency, or collection charge on the contract." Porter v. Midland-Guardian Co., 145 Ga. App. 262, 243 S.E.2d 595, rev'd on other grounds, 242 Ga. 1, 247 S.E.2d 743 (1978).
Principal is still collectible.- Once the court has determined that the creditor is in fact attempting to extort usurious interest, the lender is allowed to collect the principal, but the lender loses at least all unearned interest. Barrett v. Vernie Jones Ford, Inc., 395 F. Supp. 904 (N.D. Ga. 1975), rev'd on other grounds sub nom. McDaniel v. Fulton Nat'l Bank, 543 F.2d 568 (5th Cir. 1976), aff'd, 578 F.2d 1185 (5th Cir. 1978).
OPINIONS OF THE ATTORNEY GENERAL
Balloon payment on a retail installment contract is permissible under the Motor Vehicle Sales Finance Act, O.C.G.A. § 10-1-30 et seq. 1985 Op. Att'y Gen. No. 85-10.
RESEARCH REFERENCES
Am. Jur. 2d.
- 67 Am. Jur. 2d, Sales, § 325 et seq.
ALR.- What is "compound interest" within meaning of statutes prohibiting the charging of such interest, 10 A.L.R.3d 421.
Reformation of usurious contract, 74 A.L.R.3d 1239.
Civil remedies of consumer for violations of credit transactions provisions of Truth in Lending Act (TILA) (15 USCS § 1601 et seq.), as amended by Truth in Lending Simplification and Reform Act of 1982, 113 A.L.R. Fed. 173.
What constitutes violation of requirements of Truth in Lending Act (15 USCS § 1601 et seq.) concerning disclosure of information in credit transactions - civil cases, 113 A.L.R. Fed. 197.
What constitutes "finance charge" under § 106(a) of the Truth in Lending Act (15 USCA § 1605(a)) or applicable regulations, 154 A.L.R. Fed. 431.
Preemptive effect of Truth in Lending Act (TILA), 61 A.L.R. Fed. 2d 505.
Validity, construction, and application of Truth in Lending Act (TILA) and regulations promulgated thereunder - United States Supreme Court cases, 67 A.L.R. Fed. 2d 567.