AFIP CERTIFICATION TEST 2025/2026 EXAM CURRENTLY TESTING NEWEST COMPLETE EXAM
QUESTIONS WITH DETAILED VERIFIED ANSWERS (100% CORRECT ANSWERS) /A+ STUDY
MATERIAL
(True/False): Ignorance of the law will shield you from liability if you are noncompliant. - correct
answer False
(True/False): As an F&I manager working directly with customers, you are individually
responsible for your actions and what you say to each customer. - correct answer True
In a typical credit transaction the (bank)/(dealer) is the creditor. - correct answer The dealer is
the creditor
What is a contract? - correct answer A contract is an agreement involving a promise or set of
promises that the law enforces or protects.
The formation of a contract requires three elements: - correct answer 1. Offer
2. Acceptance
3. Consideration
An offer consists of three elements: - correct answer 1. An expression of a promise or
commitment (intent) to enter a contract
2. An expression of definite and certain terms
3. The communication of the offer to the offeree (in this case, the customer)
An offer may be terminated by: - correct answer 1. An act of the parties
2. The operation of law
There are three criteria for the acceptance of an offer: - correct answer 1. The offer is accepted
by one who is entitled to accept
2. The acceptance takes the proper form and is timely
3. The terms of acceptance reflect closely the terms of the offer and, therefore, do not amount
to a counteroffer
The Statute of Frauds - correct answer Generally requires that all contracts involving the sale of
goods for a price of $500 or more be in writing.
The Statute of Frauds requires a written contract for the sale of goods for a price of _______ or
more. - correct answer $500
,What is required in order for the parties (the individuals entering into the contract) to have
"legal capacity?" - correct answer The parties to the contract must be of legal age under the
laws of the state in which the contract is written.
Criteria that can block the formation of a valid contract: - correct answer 1. The need for a
written agreement under the Statute of Frauds and certain provisions of the Uniform
Commercial Code (U.C.C.)
2. The need for legal capacity of a party to contract
3. The act of fraudulent inducement
What is "consideration" as it applies to a contract? - correct answer The requirement that each
party to the contract receives something of value in exchange for what is given.
Finance Charge - correct answer The Finance Charge is the resulting dollar amount calculated
by applying the Annual Percentage Rate to the Amount Financed over the term of the contract.
How the Itemization of Amount Financed is completed - correct answer 1. Cash Price (Agreed
to price of vehicle)
2. Total Downpayment
3. Unpaid Balance of Cash Price(Cash Price-Downpayment)
4. Other Charges (GAP, VSC, Etc.)
5. Amount Financed
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 to the sum of all the digits of the periods. The weights are applied in reverse, applying
large weights to early periods.
Pro Rata Refunds - correct answer The term of the agreement is treated as being composed of
equal units, with a refund based on an equal-unit apportionment of the length of time the
agreement has been in force.
A pickup payment may be treated as part of the down payment if it is: - correct answer Payable
no later than the due date of the second otherwise regularly scheduled payment, not subject to
a finance charge, and not included in the amount financed.
(True/False) In situations in which the customer has the option of purchasing credit insurance
(when the lender doesn't require the coverage as a condition of granting the loan), the dollar
QUESTIONS WITH DETAILED VERIFIED ANSWERS (100% CORRECT ANSWERS) /A+ STUDY
MATERIAL
(True/False): Ignorance of the law will shield you from liability if you are noncompliant. - correct
answer False
(True/False): As an F&I manager working directly with customers, you are individually
responsible for your actions and what you say to each customer. - correct answer True
In a typical credit transaction the (bank)/(dealer) is the creditor. - correct answer The dealer is
the creditor
What is a contract? - correct answer A contract is an agreement involving a promise or set of
promises that the law enforces or protects.
The formation of a contract requires three elements: - correct answer 1. Offer
2. Acceptance
3. Consideration
An offer consists of three elements: - correct answer 1. An expression of a promise or
commitment (intent) to enter a contract
2. An expression of definite and certain terms
3. The communication of the offer to the offeree (in this case, the customer)
An offer may be terminated by: - correct answer 1. An act of the parties
2. The operation of law
There are three criteria for the acceptance of an offer: - correct answer 1. The offer is accepted
by one who is entitled to accept
2. The acceptance takes the proper form and is timely
3. The terms of acceptance reflect closely the terms of the offer and, therefore, do not amount
to a counteroffer
The Statute of Frauds - correct answer Generally requires that all contracts involving the sale of
goods for a price of $500 or more be in writing.
The Statute of Frauds requires a written contract for the sale of goods for a price of _______ or
more. - correct answer $500
,What is required in order for the parties (the individuals entering into the contract) to have
"legal capacity?" - correct answer The parties to the contract must be of legal age under the
laws of the state in which the contract is written.
Criteria that can block the formation of a valid contract: - correct answer 1. The need for a
written agreement under the Statute of Frauds and certain provisions of the Uniform
Commercial Code (U.C.C.)
2. The need for legal capacity of a party to contract
3. The act of fraudulent inducement
What is "consideration" as it applies to a contract? - correct answer The requirement that each
party to the contract receives something of value in exchange for what is given.
Finance Charge - correct answer The Finance Charge is the resulting dollar amount calculated
by applying the Annual Percentage Rate to the Amount Financed over the term of the contract.
How the Itemization of Amount Financed is completed - correct answer 1. Cash Price (Agreed
to price of vehicle)
2. Total Downpayment
3. Unpaid Balance of Cash Price(Cash Price-Downpayment)
4. Other Charges (GAP, VSC, Etc.)
5. Amount Financed
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 to the sum of all the digits of the periods. The weights are applied in reverse, applying
large weights to early periods.
Pro Rata Refunds - correct answer The term of the agreement is treated as being composed of
equal units, with a refund based on an equal-unit apportionment of the length of time the
agreement has been in force.
A pickup payment may be treated as part of the down payment if it is: - correct answer Payable
no later than the due date of the second otherwise regularly scheduled payment, not subject to
a finance charge, and not included in the amount financed.
(True/False) In situations in which the customer has the option of purchasing credit insurance
(when the lender doesn't require the coverage as a condition of granting the loan), the dollar
