Tennessee Car Consignment Rules & Dealer Requirements | 2026 Guide

Car consignment in Tennessee is legal, but dealers must follow specific state rules designed to protect sellers and buyers. These Tennessee car consignment rules, dealer requirements, and best practices (updated for 2026) cover written agreements, title handling, lien payoff, insurance, buyer disclosures, and fee transparency.

Dealer License Requirements

• Only licensed Tennessee motor vehicle dealers may legally consign and sell vehicles.

• Private individuals cannot offer consignment services without a dealer’s license.

• Dealer licensing and oversight are handled through Tennessee’s motor vehicle regulatory authorities and revenue agencies.

Source: Tennessee Motor Vehicle Dealer Licensing
Source: Tennessee Department of Revenue — Motor Vehicle Services

Written Agreements

Tennessee requires dealers to maintain an executed Consignment Agreement form developed by the Tennessee Motor Vehicle Commission for each consigned vehicle that does not have a closed title. Dealers must complete and retain this form as part of their compliance file; failure to maintain the form can result in license denial, suspension, or other enforcement action under Tennessee law.

State-Required Form (PDF):

This official state-required form captures essential information for consigned vehicles, including:

• Dealer (consignee) and seller (consignor) details

• Vehicle year, make, model, and VIN

• Lienholder information when applicable

• Signatures for both dealer and consignor

• Acknowledgment of Tennessee consignment requirements and statutory duties

Best Practice: Dealers should attach copies of the title, any limited power of attorney, registration, and the consignor’s driver’s license to the executed form and retain it at their principal place of business.

Clear written agreements are the foundation of Tennessee consignment dealer requirements and help both parties avoid disputes.

Title, Odometer & Power of Attorney Handling

In Tennessee, vehicle titles remain in the seller’s name until the vehicle is sold, and federal law requires odometer disclosure at the time of sale. Vehicles more than 20 model years old are classified as exempt from federal odometer rules.

When a dealer needs authority to transfer title for a consigned vehicle, Tennessee provides a state-issued Power of Attorney form that must be used.

Tennessee Motor Vehicle Power of Attorney (PDF):

Dealers commonly use this form to authorize title reassignment and completion of transfer documents after the vehicle is sold.

Best Practice: Dealers should retain the original title or lien documentation, a completed Tennessee Power of Attorney form, and odometer disclosure paperwork in the deal file before offering the vehicle for sale. If a lien is present, a current payoff statement and lienholder authorization should also be obtained and retained.

Source: Tennessee Department of Revenue — Vehicle Title & Registration

Escrow / Seller Funding Timeline Rules

Tennessee imposes specific notice and payment deadlines for consigned vehicles through the state-issued consignment agreement required for licensed dealers.  State-Required Form (PDF):

Under the Tennessee Motor Vehicle Commission’s mandated form, dealers must provide written notice to the seller within fourteen (14) calendar days of the vehicle’s sale. Dealers must also remit payment to the seller within thirty (30) calendar days after receiving full payment for the vehicle, unless the retail purchase agreement is rescinded before the expiration of that thirty-day period.

These timelines apply regardless of whether escrow accounts are used.

Best Practice: Dealers should retain documentation showing the sale date, funding date, notice delivery date, and seller payment date in the deal file to demonstrate compliance with Tennessee requirements.

Insurance & Test Drives

• Dealers must maintain garage liability insurance covering consigned vehicles.

• Dealer policies typically cover test drives and lot-related damage.

• Seller insurance may remain primary for certain losses once the vehicle is consigned.

Best Practice: Dealers should confirm that insurance policies explicitly cover Owned and Consigned inventory. Sellers should maintain full coverage (including comprehensive and collision). Obtain proof of insurance and include insurance initials in the consignment agreement.

Clear insurance coverage and test drive responsibility are key best practices in Tennessee car consignment dealer requirements.

Lien Payoff Process

Vehicles with open loans can be consigned in Tennessee, but the lienholder must be paid at the time of sale.

Best Practice: At intake, the seller should provide:

• Lender contact information

• Current payoff statement

• Written authorization for payoff

If negative equity exists (payoff exceeds expected net sale proceeds), the dealer should collect the difference upfront so the lien can be released promptly after sale.

Proper lien handling is a critical part of Tennessee car consignment dealer requirements.

Fee Disclosure Rules

• All commissions and fees must be disclosed in writing.

• This includes percentage commissions, flat fees, reconditioning, storage, and advertising charges.

Cancellation & Cooling-Off Notes

• Sellers may terminate consignment unless restricted by written contract terms.

• Notice requirements and retrieval fees must be disclosed in the agreement.

Tennessee Car Consignment FAQs

Here are common questions sellers and dealers ask about consignment in Tennessee.

Can a private seller consign without going through a dealer?
No. Only licensed Tennessee dealers may legally consign and sell vehicles.

How quickly will I get paid when I consign in Tennessee?
Tennessee law does not set a fixed deadline — payout timing is controlled by the written agreement. Best practice is 24–48 business hours after dealer funding.

Can a car with a loan still be consigned?
Yes. As long as the dealer handles the lien payoff at closing. If the payoff exceeds the net sale proceeds, the seller must cover the difference upfront so the lien can be fully satisfied.

Want more general answers about selling or consigning a car?
Visit Retail My Ride’s full FAQ center

Last reviewed: January 2026

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⚠️ Important Notice

This page is provided by Retail My Ride for general informational purposes only. It is not legal advice. Car consignment laws and dealer requirements may change at any time. Always confirm the latest rules with your state DMV, licensing authority, or qualified legal counsel before making decisions.