AFIP QUIZ QUESTIONS AND ANSWERS
(GRADED A+)
Which of the following disclosures are required by the Consumer Leasing Act/Reg. M to
be on a lease agreement? - ANSWER-· Detailed information regarding the lessee's
responsibility for maintaining and servicing the vehicle
· Excess wear and use standards
· An early termination fee
· The lessee's requirement to provide the vehicle insurance required by the lessor
· Other items not addressed in the question
The APR or Annual Percentage Rate is a mandated disclosure. It must be used in oral
discussions with a customer, in funding-related advertisements, and on the retail
installment sale agreement. A customer asks, what does APR mean? Your response
should be: - ANSWER-That's the "cost of credit" as a yearly rate.
As noted in the Truth in Lending Act and Reg. Z, if the customer owes more on the
trade-in than the used car manager allowed, what should the F&I manager do? -
ANSWER-A. Record the deficiency as a negative down payment.
B. Increase the price of the vehicle and/or the trade-in so the numbers still add up
correctly.
C. Depending on the situation, either A or B.
D. None of the above
If a Dealer receives a cease and desist order for an ad they ran that violated the Truth in
Lending Act/Reg. Z. If the Dealer continues to run the ad, what are the potential
penalties? - ANSWER-They could be required to pay a fine of up to $41,484 per day,
per violation
Which Act does Regulation Z implement? - ANSWER-Truth in Lending Act
How are deferred down payments treated under Truth in Lending Act and Regulation Z?
- ANSWER-A deferred downpayment occurs when the customer commits to a larger
dollar amount than the unencumbered funds he is able to provide at the time the
request for credit is submitted to a finance source. (Also referred to as a "hold-check")
(The customer tenders $3,000 in cash at the time the credit application is completed
and sent to a funding source. However, the customer promises to provide another
$2,000 in cash within five days. The request for credit sent to the funding source
indicates a downpayment of $5,000.)
· The total amount of the deferred downpayment must be paid in full before the second
otherwise regularly scheduled payment. (Before that second direct withdrawal is taken
,from the customer's bank account, 100% of the deferred amounts must have been
paid.0
· A finance charge cannot be imposed on the deferred amount. · The deferred amount
cannot be included in the amount financed - it must be recorded (included in) the
recorded downpayment
· With the exception of California, the deferred downpayment
NOTE:
If the customer provides one or more check to be included in the total amount of money
recorded as the downpayment (hold-checks) all of the checks have to be dated as of
the date of the transaction. You cannot collect "post-dated" checks.
Whenever discussing financing with a prospective customer regarding the cost of credit,
regardless of if it's in an oral discussion, advertisement or during disclosure on an
installment sale contract, the term "APR" or "annual percentage rate" should be used.
TRUE / FALSE - ANSWER-TRUE
According to Regulation Z, it is necessary to disclose APR and the Finance Charge?
TRUE?False - ANSWER-TRUE
The total sale price is _______ the largest number on the installment contract -
ANSWER-ALWAYS
Which of the following does the Federal Trade Commission (FTC) consider
advertisements? - ANSWER-A. Social media (facebook, instagram, Twitter, Tik Tok,
etc.)
B. Messages in newspapers, magazines, leaflets, flyers, a catalog, price tags with credit
information
C. Radio, TV, or public address system announcements, interior and exterior signs
D. Internet, fax, email, and telephone solicitations
E. Direct mail and letters to customers as part of an organized solicitation of business
Which if any of the items listed below is NOT a mandated TILA-box disclosure? -
ANSWER-An Assignment Statement - the Finance Source accepting assignment
If a customer is re-contracted five days after the original agreement was executed, how
should the second agreement be treated? - ANSWER-As an entirely new agreement,
with the date the second contract is executed recorded on the installment sale
agreement
Which of the following may apply to advertising? - ANSWER-Communication with a
single individual and general phrases don't meet the standards for an advertisement.
The cease and desist order and $43,792 (2021 fine) fine apply as does the dealer's
liability for the actions of an advertising agency.
According to Regulation Z, down payment and total sale price must be disclosed.
,RUE ? FALSE - ANSWER-TRUE
The Truth In Lending Act (TILA) is implemented by Regulation Z? TRUE ? FALSE -
ANSWER-TRUE
With the exception of some Precomputed Interest contracts used by secondary finance
sources, all other installment sales contracts are simple interest or interest-bearing
contracts. The following is a layman's explanation of a simple interest installment sale
transaction. In a precomputed contract the finance charge is computed on the
assumption the contract will run full term. If the customer terminates the agreement
during the repayment term, he will receive a refund of the unearned premium.
In a simple interest- or interest-bearing installment sale agreement, the finance charge
is computed daily and paid monthly throughout the term of the agreement. If the
customer pays-off the vehicle before the scheduled end of the contract there is
unearned finance charge money to refund, but it has been each month the contract has
been in force. There is no refund of the unearned finance chargE
TRUE /FALSE - ANSWER-TRUE
The term Contract Provisions is a TILA box statement. It alerts the customer to the
important information found on the front and back of the agreement. If in reading
contract provisions, the customer asked you to explain the Acceleration Clause, your
response would be? - ANSWER-A contractual right to accelerate the balance of the
installment sale agreement if the customer fails to make timely monthly payments or to
secure and maintain the required property insurance
There is a government requirement for an advertisement if you mention certain terms in
the ad known as triggering terms then you must include all of another set of terms
known as the triggered terms.
Which of the terms listed below does NOT qualify as triggering term? - ANSWER-The
name of the financing source is not a triggered term.
If an installment sale advertisement includes any one of the triggering terms, which of
the following must also be included in the ad? - ANSWER-There is a government
requirement for an advertisement, that if you mention certain terms in the ad known as
triggering terms, then you must include all of the triggered terms.
As stated in the Truth in Lending Act - Reg. Z the triggering terms for an installment sale
ad are:
· The amount or percentage of any downpayment
· The number of payments or contract term
· The amount of any payment
· The dollar amount of any finance charge.
Which of the following are not Truth in Lending Act or Reg. Z disclosure box items? -
ANSWER-he cost of the extended service agreement is not a Truth in Lending - Reg Z
disclosure.
, THE REQUIRED TILA BOX DISCLOSURES ARE:
The creditor's identity/the amount financed/an itemization of the amount financed/the
finance charge/the annual percentage rate/the repayment schedule/the total of the
payments/the total sale price (the largest number on the contact)/a prepayment
statement/late charges provisions/the dealer will acquire a security interest (lien) on the
vehicle/the need to provide insurance/a statement to refer to the document for additional
information.
As recorded on an installment sale agreement, the total sale price or deferred contract
price would be the total of the _______ - ANSWER-The total sale price is always the
largest on the retail installment contract. If a customer has a question about an entry on
the agreement, this is it. The total sale price includes:
· The total of the payments - the amount finance plus the finance charge
· The cash or cash equivalent down
· The net trade in.
Which of the following transactions are NOT regulated by Truth in Lending Act and
Regulation Z? - ANSWER-The Truth in Lending Act - Reg. Z provisions govern personal
transactions defined as a vehicle financed for the purpose of household, family,
personal use at least 51% of the time.
Whenever discussing financing with a prospective customer regarding the cost of credit,
regardless of it its in an oral discussion, advertisement of during disclosure on an
installment sale contract, the term "APR" or "annual percentage rate" should be used?
TRUE/ FALSE - ANSWER-TRUE
What is the maximum criminal liability for willful and knowing violation of TILA Reg Z
and or CLA Reg M? - ANSWER-$5000 fine and 1 year imprisonment
Which of the following is/are advertisement triggering term(s) for a lease ad? -
ANSWER-A. A statement of any capitalized cost reduction due prior to or at
consummation or delivery
B. That no payment is due at consummation or delivery
C. The amount of any payment
As an F & I manager you want to record the negative equity on an installment sale
agreement and the negative equity is greater than the amount paid down, what should
you do? - ANSWER-A. Deduct the cash down amount from the negative equity, record
the down payment on the contract as zero, and record the amount still owed on the
trade as an additional amount financed
A principal purpose of TILA is to promote the informed use of consumer credit by
requiring disclosures about its terms and cost. TRUR ? FALSE - ANSWER-TRUE
Which of the following regulations implements the Truth in Lending Act? - ANSWER-
Regulation Z
(GRADED A+)
Which of the following disclosures are required by the Consumer Leasing Act/Reg. M to
be on a lease agreement? - ANSWER-· Detailed information regarding the lessee's
responsibility for maintaining and servicing the vehicle
· Excess wear and use standards
· An early termination fee
· The lessee's requirement to provide the vehicle insurance required by the lessor
· Other items not addressed in the question
The APR or Annual Percentage Rate is a mandated disclosure. It must be used in oral
discussions with a customer, in funding-related advertisements, and on the retail
installment sale agreement. A customer asks, what does APR mean? Your response
should be: - ANSWER-That's the "cost of credit" as a yearly rate.
As noted in the Truth in Lending Act and Reg. Z, if the customer owes more on the
trade-in than the used car manager allowed, what should the F&I manager do? -
ANSWER-A. Record the deficiency as a negative down payment.
B. Increase the price of the vehicle and/or the trade-in so the numbers still add up
correctly.
C. Depending on the situation, either A or B.
D. None of the above
If a Dealer receives a cease and desist order for an ad they ran that violated the Truth in
Lending Act/Reg. Z. If the Dealer continues to run the ad, what are the potential
penalties? - ANSWER-They could be required to pay a fine of up to $41,484 per day,
per violation
Which Act does Regulation Z implement? - ANSWER-Truth in Lending Act
How are deferred down payments treated under Truth in Lending Act and Regulation Z?
- ANSWER-A deferred downpayment occurs when the customer commits to a larger
dollar amount than the unencumbered funds he is able to provide at the time the
request for credit is submitted to a finance source. (Also referred to as a "hold-check")
(The customer tenders $3,000 in cash at the time the credit application is completed
and sent to a funding source. However, the customer promises to provide another
$2,000 in cash within five days. The request for credit sent to the funding source
indicates a downpayment of $5,000.)
· The total amount of the deferred downpayment must be paid in full before the second
otherwise regularly scheduled payment. (Before that second direct withdrawal is taken
,from the customer's bank account, 100% of the deferred amounts must have been
paid.0
· A finance charge cannot be imposed on the deferred amount. · The deferred amount
cannot be included in the amount financed - it must be recorded (included in) the
recorded downpayment
· With the exception of California, the deferred downpayment
NOTE:
If the customer provides one or more check to be included in the total amount of money
recorded as the downpayment (hold-checks) all of the checks have to be dated as of
the date of the transaction. You cannot collect "post-dated" checks.
Whenever discussing financing with a prospective customer regarding the cost of credit,
regardless of if it's in an oral discussion, advertisement or during disclosure on an
installment sale contract, the term "APR" or "annual percentage rate" should be used.
TRUE / FALSE - ANSWER-TRUE
According to Regulation Z, it is necessary to disclose APR and the Finance Charge?
TRUE?False - ANSWER-TRUE
The total sale price is _______ the largest number on the installment contract -
ANSWER-ALWAYS
Which of the following does the Federal Trade Commission (FTC) consider
advertisements? - ANSWER-A. Social media (facebook, instagram, Twitter, Tik Tok,
etc.)
B. Messages in newspapers, magazines, leaflets, flyers, a catalog, price tags with credit
information
C. Radio, TV, or public address system announcements, interior and exterior signs
D. Internet, fax, email, and telephone solicitations
E. Direct mail and letters to customers as part of an organized solicitation of business
Which if any of the items listed below is NOT a mandated TILA-box disclosure? -
ANSWER-An Assignment Statement - the Finance Source accepting assignment
If a customer is re-contracted five days after the original agreement was executed, how
should the second agreement be treated? - ANSWER-As an entirely new agreement,
with the date the second contract is executed recorded on the installment sale
agreement
Which of the following may apply to advertising? - ANSWER-Communication with a
single individual and general phrases don't meet the standards for an advertisement.
The cease and desist order and $43,792 (2021 fine) fine apply as does the dealer's
liability for the actions of an advertising agency.
According to Regulation Z, down payment and total sale price must be disclosed.
,RUE ? FALSE - ANSWER-TRUE
The Truth In Lending Act (TILA) is implemented by Regulation Z? TRUE ? FALSE -
ANSWER-TRUE
With the exception of some Precomputed Interest contracts used by secondary finance
sources, all other installment sales contracts are simple interest or interest-bearing
contracts. The following is a layman's explanation of a simple interest installment sale
transaction. In a precomputed contract the finance charge is computed on the
assumption the contract will run full term. If the customer terminates the agreement
during the repayment term, he will receive a refund of the unearned premium.
In a simple interest- or interest-bearing installment sale agreement, the finance charge
is computed daily and paid monthly throughout the term of the agreement. If the
customer pays-off the vehicle before the scheduled end of the contract there is
unearned finance charge money to refund, but it has been each month the contract has
been in force. There is no refund of the unearned finance chargE
TRUE /FALSE - ANSWER-TRUE
The term Contract Provisions is a TILA box statement. It alerts the customer to the
important information found on the front and back of the agreement. If in reading
contract provisions, the customer asked you to explain the Acceleration Clause, your
response would be? - ANSWER-A contractual right to accelerate the balance of the
installment sale agreement if the customer fails to make timely monthly payments or to
secure and maintain the required property insurance
There is a government requirement for an advertisement if you mention certain terms in
the ad known as triggering terms then you must include all of another set of terms
known as the triggered terms.
Which of the terms listed below does NOT qualify as triggering term? - ANSWER-The
name of the financing source is not a triggered term.
If an installment sale advertisement includes any one of the triggering terms, which of
the following must also be included in the ad? - ANSWER-There is a government
requirement for an advertisement, that if you mention certain terms in the ad known as
triggering terms, then you must include all of the triggered terms.
As stated in the Truth in Lending Act - Reg. Z the triggering terms for an installment sale
ad are:
· The amount or percentage of any downpayment
· The number of payments or contract term
· The amount of any payment
· The dollar amount of any finance charge.
Which of the following are not Truth in Lending Act or Reg. Z disclosure box items? -
ANSWER-he cost of the extended service agreement is not a Truth in Lending - Reg Z
disclosure.
, THE REQUIRED TILA BOX DISCLOSURES ARE:
The creditor's identity/the amount financed/an itemization of the amount financed/the
finance charge/the annual percentage rate/the repayment schedule/the total of the
payments/the total sale price (the largest number on the contact)/a prepayment
statement/late charges provisions/the dealer will acquire a security interest (lien) on the
vehicle/the need to provide insurance/a statement to refer to the document for additional
information.
As recorded on an installment sale agreement, the total sale price or deferred contract
price would be the total of the _______ - ANSWER-The total sale price is always the
largest on the retail installment contract. If a customer has a question about an entry on
the agreement, this is it. The total sale price includes:
· The total of the payments - the amount finance plus the finance charge
· The cash or cash equivalent down
· The net trade in.
Which of the following transactions are NOT regulated by Truth in Lending Act and
Regulation Z? - ANSWER-The Truth in Lending Act - Reg. Z provisions govern personal
transactions defined as a vehicle financed for the purpose of household, family,
personal use at least 51% of the time.
Whenever discussing financing with a prospective customer regarding the cost of credit,
regardless of it its in an oral discussion, advertisement of during disclosure on an
installment sale contract, the term "APR" or "annual percentage rate" should be used?
TRUE/ FALSE - ANSWER-TRUE
What is the maximum criminal liability for willful and knowing violation of TILA Reg Z
and or CLA Reg M? - ANSWER-$5000 fine and 1 year imprisonment
Which of the following is/are advertisement triggering term(s) for a lease ad? -
ANSWER-A. A statement of any capitalized cost reduction due prior to or at
consummation or delivery
B. That no payment is due at consummation or delivery
C. The amount of any payment
As an F & I manager you want to record the negative equity on an installment sale
agreement and the negative equity is greater than the amount paid down, what should
you do? - ANSWER-A. Deduct the cash down amount from the negative equity, record
the down payment on the contract as zero, and record the amount still owed on the
trade as an additional amount financed
A principal purpose of TILA is to promote the informed use of consumer credit by
requiring disclosures about its terms and cost. TRUR ? FALSE - ANSWER-TRUE
Which of the following regulations implements the Truth in Lending Act? - ANSWER-
Regulation Z
