diff --git a/config/config.go b/config/config.go
index 5b9d9a1f..49bc4080 100644
--- a/config/config.go
+++ b/config/config.go
@@ -52,9 +52,6 @@ const (
 	// DefaultConfigFilePath is the default path on disk to the garm
 	// configuration file.
 	DefaultConfigFilePath = "/etc/garm/config.toml"
-	// DefaultConfigDir is the default path on disk to the config dir. The config
-	// file will probably be in the same folder, but it is not mandatory.
-	DefaultConfigDir = "/etc/garm"
 
 	// DefaultUser is the default username that should exist on the instances.
 	DefaultUser = "runner"
@@ -73,6 +70,10 @@ const (
 )
 
 var (
+	// DefaultConfigDir is the default path on disk to the config dir. The config
+	// file will probably be in the same folder, but it is not mandatory.
+	DefaultConfigDir = "/etc/garm"
+	
 	// DefaultUserGroups are the groups the default user will be part of.
 	DefaultUserGroups = []string{
 		"sudo", "adm", "cdrom", "dialout",
diff --git a/config/config_test.go b/config/config_test.go
index 464bb8ef..009fd8c8 100644
--- a/config/config_test.go
+++ b/config/config_test.go
@@ -655,3 +655,61 @@ func TestTimeToLiveDuration(t *testing.T) {
 	require.NotNil(t, err)
 	require.EqualError(t, err, "time: unknown unit \"d\" in duration \"2d\"")
 }
+
+func TestNewConfig(t *testing.T) {
+	cfg, err := NewConfig("testdata/test-valid-config.toml")
+	require.Nil(t, err)
+	require.NotNil(t, cfg)
+	require.Equal(t, "https://garm.example.com/", cfg.Default.CallbackURL)
+	require.Equal(t, "./testdata/config_dir", cfg.Default.ConfigDir)
+	require.Equal(t, "0.0.0.0", cfg.APIServer.Bind)
+	require.Equal(t, 9998, cfg.APIServer.Port)
+	require.Equal(t, false, cfg.APIServer.UseTLS)
+	require.Equal(t, DBBackendType("mysql"), cfg.Database.DbBackend)
+	require.Equal(t, "bocyasicgatEtenOubwonIbsudNutDom", cfg.Database.Passphrase)
+	require.Equal(t, "test", cfg.Database.MySQL.Username)
+	require.Equal(t, "test", cfg.Database.MySQL.Password)
+	require.Equal(t, "127.0.0.1", cfg.Database.MySQL.Hostname)
+	require.Equal(t, "garm", cfg.Database.MySQL.DatabaseName)
+	require.Equal(t, "bocyasicgatEtenOubwonIbsudNutDom", cfg.JWTAuth.Secret)
+	require.Equal(t, timeToLive("48h"), cfg.JWTAuth.TimeToLive)
+}
+
+func TestNewConfigEmptyConfigDir(t *testing.T) {
+	dirPath, err := ioutil.TempDir("", "garm-config-test")
+	if err != nil {
+		t.Fatalf("failed to create temporary directory: %s", err)
+	}
+	defer os.RemoveAll(dirPath)
+	DefaultConfigDir = dirPath
+
+	cfg, err := NewConfig("testdata/test-empty-config-dir.toml")
+	require.Nil(t, err)
+	require.NotNil(t, cfg)
+	require.Equal(t, cfg.Default.ConfigDir, dirPath)
+	require.Equal(t, "https://garm.example.com/", cfg.Default.CallbackURL)
+	require.Equal(t, "0.0.0.0", cfg.APIServer.Bind)
+	require.Equal(t, 9998, cfg.APIServer.Port)
+	require.Equal(t, false, cfg.APIServer.UseTLS)
+	require.Equal(t, DBBackendType("mysql"), cfg.Database.DbBackend)
+	require.Equal(t, "test", cfg.Database.MySQL.Username)
+	require.Equal(t, "test", cfg.Database.MySQL.Password)
+	require.Equal(t, "127.0.0.1", cfg.Database.MySQL.Hostname)
+	require.Equal(t, "garm", cfg.Database.MySQL.DatabaseName)
+	require.Equal(t, "bocyasicgatEtenOubwonIbsudNutDom", cfg.JWTAuth.Secret)
+	require.Equal(t, timeToLive("48h"), cfg.JWTAuth.TimeToLive)
+}
+
+func TestNewConfigInvalidTomlPath(t *testing.T) {
+	cfg, err := NewConfig("this is not a file path")
+	require.Nil(t, cfg)
+	require.NotNil(t, err)
+	require.Regexp(t, "decoding toml", err.Error())
+}
+
+func TestNewConfigInvalidConfig(t *testing.T) {
+	cfg, err := NewConfig("testdata/test-invalid-config.toml")
+	require.Nil(t, cfg)
+	require.NotNil(t, err)
+	require.Regexp(t, "validating config", err.Error())
+}
diff --git a/config/testdata/test-empty-config-dir.toml b/config/testdata/test-empty-config-dir.toml
new file mode 100644
index 00000000..30f36e7a
--- /dev/null
+++ b/config/testdata/test-empty-config-dir.toml
@@ -0,0 +1,22 @@
+[default]
+  callback_url = "https://garm.example.com/"
+  config_dir = ""
+
+[apiserver]
+  bind = "0.0.0.0"
+  port = 9998
+  use_tls = false
+
+[database]
+  backend = "mysql"
+  passphrase = "bocyasicgatEtenOubwonIbsudNutDom"
+
+  [database.mysql]
+    username = "test"
+    password = "test"
+    hostname = "127.0.0.1"
+    database = "garm"
+
+[jwt_auth]
+  secret = "bocyasicgatEtenOubwonIbsudNutDom"
+  time_to_live = "48h"
diff --git a/config/testdata/test-invalid-config.toml b/config/testdata/test-invalid-config.toml
new file mode 100644
index 00000000..2f62acf2
--- /dev/null
+++ b/config/testdata/test-invalid-config.toml
@@ -0,0 +1,2 @@
+[apiserver]
+  port = -2  # this is considered an invalid port for garm
diff --git a/config/testdata/test-valid-config.toml b/config/testdata/test-valid-config.toml
new file mode 100644
index 00000000..5885f90f
--- /dev/null
+++ b/config/testdata/test-valid-config.toml
@@ -0,0 +1,22 @@
+[default]
+  callback_url = "https://garm.example.com/"
+  config_dir = "./testdata/config_dir"
+
+[apiserver]
+  bind = "0.0.0.0"
+  port = 9998
+  use_tls = false
+
+[database]
+  backend = "mysql"
+  passphrase = "bocyasicgatEtenOubwonIbsudNutDom"
+
+  [database.mysql]
+    username = "test"
+    password = "test"
+    hostname = "127.0.0.1"
+    database = "garm"
+
+[jwt_auth]
+  secret = "bocyasicgatEtenOubwonIbsudNutDom"
+  time_to_live = "48h"