Quasi Agreement – Georgia Car Law Authority

There are two different perspectives when it comes to car financing. One is the Buy Here, Pay Here, self-financing dealer that takes payments and runs the financing in-house, and the other perspective is the dealer that sells off their accounts to finance companies. Watch this video to learn how the quasi agreement plays an important role in these financing perspectives.


Below is a transcript of the video:

Now we are going to talk about finance, but we’re to talk about it from two different perspectives. One is the Buy Here, Pay Here, self-financing dealers that are taking payments and running the financing in-house. The other perspective is, of course, the dealers that sell off their accounts to finance companies. Both have really interesting nuance-y issues and some complications that a lot of dealers don’t know about that we see in court, but otherwise are not things that would be readily known.

The first is something called a quasi-agreement. Strict compliance is a phrase that a lot of dealers may have heard before. Basically, it means, in the terms of finance, that the consumer has a certain deadline on payments, for example. The consumer has to make monthly payments on the 5th of every month. If they miss a payment and a dealer is a strict compliance dealer, then the dealer could repo, depending on the terms of the contract, and repo on the sixth day of the month, the day after the missed payment.

Georgia law does not require any kind of notice before a repossession so a repossession could occur the next day. Some dealers say, “I don’t want to do that, I want to give the customer some time to pay,” whether it’s an extra five days, some kind of grace period, or 10 days. If the customer calls and says, “I can’t make the payment today, but I can do it by the 10th. Will you let me do it by the 10th?” and the dealer says, “OK, fine.Quasi Agreement

In that case, the dealer has made an exception to strict compliance, meaning the dealer is allowing the customer to do something that’s outside the strict terms of the contract. One time is usually okay. Two times, and it’s created a course of conduct. For example, let’s say the payment’s due on the 5th. The dealer allows the customer to pay on the 10th, the first late month, January. The second month in February, the customer pays again on the 10th and the dealer has not repossessed the car either time, just allowed late payments. In the third month, March, the customer pays on the 8th. The payment’s still due on the fifth, but the customer is late every single time. In April on the 6th, the dealer repossessed the car and says to themselves, I’m tired of accepting late payments and I’m not going to do it anymore. They do not notify the customer.

In some cases, Georgia law says you can’t do that as a dealer. That the dealer has created a quasi-agreement, meaning a pseudo-agreement, a “sort-of” agreement, if you will. Where the dealer has now allowed the customer to believe that the customer can make late payments without consequence. Unless the dealer puts the customer on notice of strict compliance, which is essentially a letter or something written that the dealer can prove in court that they’ve sent to the customer that is a notice of strict compliance.

It says to the customer, these are the terms of your contract. You are expected to follow them. Paying even a day late may result in repossession. Don’t quote me on that, but some form of notice to the customer.

If that doesn’t happen and there’s a quasi-agreement or a court finds that there’s a quasi-agreement then the dealer could be held liable for wrongful repossession. Be real careful as a Buy Here, Pay Here dealer, or anyone financing.

Allowing late payments without notice of strict compliance may create a quasi-agreement that would be a real thorn in the side of the finance wing if they want to go repo car.



For more videos on the Georgia Car Law Authority series, please visit www.georgiacarlaw.com.

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