Seller Financing a Vehicle in Georgia: Promissory Note, Usury Laws & UCC Guide
Owner financing (also called installment sale or seller carry-back) lets a private seller act as the bank. This guide covers every document you need, Georgia's usury rate cap, how to perfect your security interest, and what to do if the buyer defaults.
What Is Seller Financing for a Vehicle?
In a seller-financed vehicle sale, the buyer pays a down payment at closing and then makes regular installment payments directly to you — the seller — over an agreed period. No bank or credit union is involved. You carry the note.
This arrangement appeals to buyers who cannot qualify for conventional auto loans and to sellers who want to move a vehicle quickly or earn interest income on the unpaid balance. The risk is yours: if the buyer stops paying, you must enforce the note and, if necessary, repossess the vehicle.
Required Documents in Georgia
Records the ownership transfer and purchase price. Required in most states to register the vehicle.
The formal IOU. States the loan amount, interest rate, payment schedule, and consequences of default.
Gives you a lien on the vehicle. The buyer cannot sell the car free and clear until the note is paid off.
Filed with Georgia Superior Court Clerks to make your lien public record and protect you against third-party claims. $10 filing fee (UCC-1 with Georgia Superior Court Clerks).
Georgia Seller Financing Rules at a Glance
| Rule | Georgia Detail |
|---|---|
| Maximum interest rate | 16% per year (Georgia Code §7-4-2) |
| Title retention allowed | Yes |
| UCC-1 lien filing | Required — $10 filing fee (UCC-1 with Georgia Superior Court Clerks) |
| Repossession process | Self-help under UCC Article 9 (no court order required absent breach of peace) |
| Filing agency | Georgia Superior Court Clerks |
Georgia note: Georgia imposes a one-time Title Ad Valorem Tax (TAVT) on vehicle purchases. On a seller-financed sale, TAVT is due at the time of title transfer. Ensure the installment agreement reflects the full purchase price to avoid TAVT shortfalls.
How to Sell a Vehicle on Installment in Georgia
- 1
Agree on the sale price and down payment
Set a purchase price, down payment (ideally 10–20%), and confirm the buyer can maintain insurance on the vehicle throughout the loan term in Georgia.
- 2
Draft a promissory note
The promissory note must state the principal amount, annual interest rate, payment schedule (monthly amount and due dates), total number of payments, and consequences of default. In Georgia, keep the rate at or below 16% per year (Georgia Code §7-4-2).
- 3
Execute a security agreement
A security agreement (separate from the promissory note) creates the seller's lien on the vehicle. It should identify the vehicle by VIN, describe the collateral, and spell out the seller's repossession rights on default.
- 4
Handle the title in Georgia
Georgia allows the seller to retain the certificate of title as collateral, or you can transfer the title to the buyer with a lien noted. Recording the lien with Georgia Superior Court Clerks creates public notice of your security interest.
- 5
File a UCC-1 financing statement (required)
File a UCC-1 with the Georgia Superior Court Clerks to perfect your security interest. $10 filing fee (UCC-1 with Georgia Superior Court Clerks). This filing gives you priority over other creditors and is the legal backbone of your seller-financing arrangement.
- 6
Collect and track payments
Issue written receipts for every payment. Keep a running ledger showing the outstanding balance, interest accrued, and remaining payments. Email receipts create a time-stamped paper trail if a dispute arises.
- 7
Release the lien on payoff
Once the buyer makes the final payment, immediately file a UCC-3 termination statement and release the lien on the title. Delays can expose you to liability in Georgia for failure to release a satisfied lien.
Usury Laws in Georgia
Georgia's usury statute caps private consumer loan rates at 16% annually. Seller-financed vehicle installment sales between private parties are covered. Exceeding this rate voids the excess interest and may expose the seller to the buyer's attorney fees.
Title Handling in Georgia
Georgia allows lien notation through the Georgia Department of Revenue Motor Vehicle Division. Title is held electronically. File Form T-4 (Security Interest Filing) to record your lien.
Regardless of how the title is handled, file a UCC-1 financing statement with the Georgia Superior Court Clerks immediately after the sale. This creates a public record of your security interest and protects you if the buyer attempts to sell the vehicle, files for bankruptcy, or has other creditors.
Default and Repossession in Georgia
Default occurs when the buyer misses a payment, fails to maintain insurance, or violates another material term of the installment agreement. Your security agreement should define what constitutes default and what notice (if any) you must give before exercising remedies.
Georgia permits self-help repossession under UCC Article 9. After repossession, provide a written notice of the time and place of the resale at least 10 days before the sale. Buyer has a right of redemption until the resale.
Risks of Seller Financing
Buyer defaults
Require a meaningful down payment (10–20%), verify income and references, and file a UCC-1 lien immediately.
Vehicle damage reduces collateral value
Require the buyer to maintain full-coverage insurance naming you as lienholder throughout the loan term.
Interest cap violation
Stay below 16% per year (Georgia Code §7-4-2) and document the agreed rate in writing on the promissory note.
Buyer files for bankruptcy
A perfected UCC-1 lien gives you secured-creditor status, which is significantly better than unsecured creditor in bankruptcy proceedings.
Buyer sells the vehicle to a third party
A UCC-1 filing and/or lien notation on the title puts third-party buyers on constructive notice of your interest.
Seller Financing FAQ — Georgia
What documents do I need to sell a car on installment in Georgia?
You need a bill of sale (for the initial ownership transfer), a promissory note (the financing instrument), and a security agreement (creating your lien on the vehicle). In Georgia, you should also file a UCC-1 financing statement to perfect your security interest.
What is the maximum interest rate I can charge for seller financing in Georgia?
16% per year (Georgia Code §7-4-2). Georgia's usury statute caps private consumer loan rates at 16% annually. Seller-financed vehicle installment sales between private parties are covered. Exceeding this rate voids the excess interest and may expose the seller to the buyer's attorney fees.
Can I keep the car title until the buyer pays off the note in Georgia?
Yes. Georgia permits title retention as a form of collateral. Georgia allows lien notation through the Georgia Department of Revenue Motor Vehicle Division. Title is held electronically. File Form T-4 (Security Interest Filing) to record your lien.
What happens if the buyer stops making payments?
Georgia permits self-help repossession under UCC Article 9. After repossession, provide a written notice of the time and place of the resale at least 10 days before the sale. Buyer has a right of redemption until the resale. Always consult an attorney before repossessing to ensure you comply with Georgia notice requirements and UCC Article 9 procedures.
Do I need to register as a dealer to offer seller financing in Georgia?
Private individuals who occasionally sell vehicles and offer financing are generally not required to obtain a dealer license in Georgia. However, if you regularly engage in the business of selling and financing vehicles, dealer and sales finance company licensing may apply. One-off transactions between private parties are typically exempt.
What is a UCC-1 financing statement and why does it matter?
A UCC-1 financing statement is a public notice filed with the state government that tells the world you have a security interest in the vehicle. Without it, a buyer who fraudulently sells the car to a third party could leave you with no recourse against the new owner. Filing perfects your lien and gives you priority over most other creditors.
Generate Your Georgia Vehicle Bill of Sale
Start with a legally sound bill of sale, then attach your promissory note and security agreement.
Create Bill of Sale