FINANCE & INSURANCE LEGAL&
ETHICAL STANDARDS (FILES) TERMS
EXAM QUESTIONS & VERIFIED
CORRECT ANSWERS
Amount Financed - Correct Answer ✔✔ The total amount of credit provided to or on
behalf of the buyer
APR (Annual Percentage Rate) - Correct Answer ✔✔ The consumer's cost of credit,
expressed as yearly rate (a percentage)
Balloon Payment Contract - Correct Answer ✔✔ A installment sales contact where the
final payment is substantially larger than the monthly payments.
Capitalized Cost Reduction - Correct Answer ✔✔ Similar to a down payment. Payment
made in cash or trade equity at the time of lease signing and applied to reduce the
lessor's gross capitalized cost and monthly lease payments.
Closed End Credit - Correct Answer ✔✔ The extension of a specific amount of credit for
a single transaction that the customer must pay back in a designed number of
scheduled installments.
Closed End Lease - Correct Answer ✔✔ Also known as "net," "non participating," or
"walk away" lease. Lease that does not hold lessee accountable at end of lease for the
difference between residual originally estimated for the vehicle and its final realized
value.
Consumer Debt - Correct Answer ✔✔ Any obligation of a consumer to pay money
arising out of a transaction in which the money, property, insurance or services are for
personal, family or household purposes.
Consumer Lease - Correct Answer ✔✔ A contract in the form of bailment or lease for
the use of persona property by a person primarily for personal, family or household
purposes.
Consumer Reporting Agency - Correct Answer ✔✔ A company that assembles or
evaluates consumer credit information for the purpose of furnishing third parties with
information about a consumer's creditworthiness.
Contract - Correct Answer ✔✔ a legally binding agreement between two or more parties
that forms basis for performance.
ETHICAL STANDARDS (FILES) TERMS
EXAM QUESTIONS & VERIFIED
CORRECT ANSWERS
Amount Financed - Correct Answer ✔✔ The total amount of credit provided to or on
behalf of the buyer
APR (Annual Percentage Rate) - Correct Answer ✔✔ The consumer's cost of credit,
expressed as yearly rate (a percentage)
Balloon Payment Contract - Correct Answer ✔✔ A installment sales contact where the
final payment is substantially larger than the monthly payments.
Capitalized Cost Reduction - Correct Answer ✔✔ Similar to a down payment. Payment
made in cash or trade equity at the time of lease signing and applied to reduce the
lessor's gross capitalized cost and monthly lease payments.
Closed End Credit - Correct Answer ✔✔ The extension of a specific amount of credit for
a single transaction that the customer must pay back in a designed number of
scheduled installments.
Closed End Lease - Correct Answer ✔✔ Also known as "net," "non participating," or
"walk away" lease. Lease that does not hold lessee accountable at end of lease for the
difference between residual originally estimated for the vehicle and its final realized
value.
Consumer Debt - Correct Answer ✔✔ Any obligation of a consumer to pay money
arising out of a transaction in which the money, property, insurance or services are for
personal, family or household purposes.
Consumer Lease - Correct Answer ✔✔ A contract in the form of bailment or lease for
the use of persona property by a person primarily for personal, family or household
purposes.
Consumer Reporting Agency - Correct Answer ✔✔ A company that assembles or
evaluates consumer credit information for the purpose of furnishing third parties with
information about a consumer's creditworthiness.
Contract - Correct Answer ✔✔ a legally binding agreement between two or more parties
that forms basis for performance.
