AFIP CERTIFICATION EXAM ACTUAL
EXAM, PRACTICE TEST AND
STUDYGUIDE 2024-2025 QUESTIONS
AND DETAILED CORRECT ANSWERS |
A+ GRADE
4 Key Sections of an installment sale contract Correct
Answer Section A) General Information -- Identifies the
parties to the agreement.
Section B) Mandated Disclosures -- Disclosures required
by TILA
Section C) Insurance-Related Disclosures --Credit
insurance is optional
Section D) Signature Blocks - Notice to Buyer Disclosures
--Bind all parties to contract
The introductory information and promise to pay contained
in Section A of Retail Installment Form Correct Answer
Promise to Pay - This section outlines the purpose of the
transaction and the primary obligations that will be
incurred from signing the contract.
The difference between full or partial recourse and no
recourse assignments. Correct Answer Essentially
,determines the length of time, if any, the seller is
responsible for the actions of the buyer.
Warranty disclaimers do not apply to _______ warranties
on new or used vehicles to which that warranty still
applies. Correct Answer Manufacturer's
A(n) _______ clause allows the creditor to declare the
entire outstanding balance due and payable. Correct
Answer Acceleration
As recorded on an installment sale agreement, the total
sale price or deferred contract price would be the total of
the ________. Correct Answer -Payments
-Downpayment
-Net Trade-In
Which is NOT listed as a mandated TILA box disclosure?
Correct Answer Holder-in-Due Course Notice
In most states, the _______ is deemed to be part of the
purchase agreement. Correct Answer Buyer's Guide
(True/False) Because the late charges that may be
imposed on an installment sale agreement are regulated
at the state level, the amount of the late charge is NOT a
required disclosure item. Correct Answer False
At the time of consummation, an installment sale contract
is between the _______ and the _______. Correct Answer
Customer, Dealer
,The Truth in Lending Act and Reg. Z govern installment
sale transactions for vehicles purchased for what type(s)
of uses? Correct Answer Personal, Family or Household
What is always the largest number on an installment sale
agreement? Correct Answer The total sale price
What does "force-placed" or "creditor-placed" mean?
Correct Answer Allows the creditor to force place
insurance - that is, buy physical damage insurance to
cover the creditor's interest in the vehicle or the creditor's
and the buyer's interest in the vehicle if the buyer fails to
do so.
(True/False) Installment sale agreements notify the
customer of the state's laws regarding repossession and
how (if applicable) the customer can redeem the vehicle or
reinstate the contract. Correct Answer True
How are installment sale contracts regulated? Correct
Answer By federal and state law
(True/False) If the vehicle is declared a total loss, the
creditor may claim the proceeds from the physical damage
insurance. Correct Answer True
Closed-End Credit Correct Answer A fixed amount of
money borrowed for a specified period of time, such as for
home mortgages, vehicle purchases and other types of
installment-based financing.
, Closed-End Credit Terminology (Customer Arranged)
Correct Answer Transaction -- Loan
Document -- Note
Cost of Credit -- Interest
Cost of credit stated as -- APR
Parties to the agreement -- Lender- customer
Closed-End Credit Terminology (Dealer Arranged) Correct
Answer Transaction -- Credit Sale
Document -- Installment Sale Agreement
Cost of Credit -- Finance Charge
Cost of credit stated as -- APR
Parties to the agreement -- Dealer- customer-assigned to
a lender or captive finance source
Precomputed Interest Correct Answer The cost of credit
(finance charge) is calculated upfront when the agreement
is computed and repaid monthly over its term.
Simple Interest Correct Answer The cost of credit (finance
charge) is calculated daily based on the outstanding
balance and paid monthly. For the customer, the only
advantage to an agreement based on simple interest
finance charge is if it does not run full term.
The Rule of 78s Correct Answer Most common method for
calculating precomputed interest. Allows the creditor to
claim a greater portion of the finance charge during the
initial part of the repayment period. Under the Rule of 78,
periods are weighted by comparing their numerical values
EXAM, PRACTICE TEST AND
STUDYGUIDE 2024-2025 QUESTIONS
AND DETAILED CORRECT ANSWERS |
A+ GRADE
4 Key Sections of an installment sale contract Correct
Answer Section A) General Information -- Identifies the
parties to the agreement.
Section B) Mandated Disclosures -- Disclosures required
by TILA
Section C) Insurance-Related Disclosures --Credit
insurance is optional
Section D) Signature Blocks - Notice to Buyer Disclosures
--Bind all parties to contract
The introductory information and promise to pay contained
in Section A of Retail Installment Form Correct Answer
Promise to Pay - This section outlines the purpose of the
transaction and the primary obligations that will be
incurred from signing the contract.
The difference between full or partial recourse and no
recourse assignments. Correct Answer Essentially
,determines the length of time, if any, the seller is
responsible for the actions of the buyer.
Warranty disclaimers do not apply to _______ warranties
on new or used vehicles to which that warranty still
applies. Correct Answer Manufacturer's
A(n) _______ clause allows the creditor to declare the
entire outstanding balance due and payable. Correct
Answer Acceleration
As recorded on an installment sale agreement, the total
sale price or deferred contract price would be the total of
the ________. Correct Answer -Payments
-Downpayment
-Net Trade-In
Which is NOT listed as a mandated TILA box disclosure?
Correct Answer Holder-in-Due Course Notice
In most states, the _______ is deemed to be part of the
purchase agreement. Correct Answer Buyer's Guide
(True/False) Because the late charges that may be
imposed on an installment sale agreement are regulated
at the state level, the amount of the late charge is NOT a
required disclosure item. Correct Answer False
At the time of consummation, an installment sale contract
is between the _______ and the _______. Correct Answer
Customer, Dealer
,The Truth in Lending Act and Reg. Z govern installment
sale transactions for vehicles purchased for what type(s)
of uses? Correct Answer Personal, Family or Household
What is always the largest number on an installment sale
agreement? Correct Answer The total sale price
What does "force-placed" or "creditor-placed" mean?
Correct Answer Allows the creditor to force place
insurance - that is, buy physical damage insurance to
cover the creditor's interest in the vehicle or the creditor's
and the buyer's interest in the vehicle if the buyer fails to
do so.
(True/False) Installment sale agreements notify the
customer of the state's laws regarding repossession and
how (if applicable) the customer can redeem the vehicle or
reinstate the contract. Correct Answer True
How are installment sale contracts regulated? Correct
Answer By federal and state law
(True/False) If the vehicle is declared a total loss, the
creditor may claim the proceeds from the physical damage
insurance. Correct Answer True
Closed-End Credit Correct Answer A fixed amount of
money borrowed for a specified period of time, such as for
home mortgages, vehicle purchases and other types of
installment-based financing.
, Closed-End Credit Terminology (Customer Arranged)
Correct Answer Transaction -- Loan
Document -- Note
Cost of Credit -- Interest
Cost of credit stated as -- APR
Parties to the agreement -- Lender- customer
Closed-End Credit Terminology (Dealer Arranged) Correct
Answer Transaction -- Credit Sale
Document -- Installment Sale Agreement
Cost of Credit -- Finance Charge
Cost of credit stated as -- APR
Parties to the agreement -- Dealer- customer-assigned to
a lender or captive finance source
Precomputed Interest Correct Answer The cost of credit
(finance charge) is calculated upfront when the agreement
is computed and repaid monthly over its term.
Simple Interest Correct Answer The cost of credit (finance
charge) is calculated daily based on the outstanding
balance and paid monthly. For the customer, the only
advantage to an agreement based on simple interest
finance charge is if it does not run full term.
The Rule of 78s Correct Answer Most common method for
calculating precomputed interest. Allows the creditor to
claim a greater portion of the finance charge during the
initial part of the repayment period. Under the Rule of 78,
periods are weighted by comparing their numerical values
