AFIP Basic Certification Exam V1 | Over 300
Questions and Answers| Latest Update 2026/
2027 | Graded A+ | 100% Correct.
Which of the following disclosures are required by the Consumer Leasing Act/Reg. M to be on a
lease agreement?
· 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
Which if any of the items listed below is NOT a mandated TILA-box disclosure? An
Assignment Statement - the Finance Source accepting assignment
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? 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
Why is the Buy Rate Marked up for Dealer-arranged Financing?
The transaction origination expense
The servicing expense - the costs incurred servicing the loan - collecting the payments, customer
service, etc.
Securing the money-to-lend expense - the cost of acquiring money to lend.
A dealer does not need an Identity Theft Prevention Program if the dealer processes all requests
for credit through a credit portal that uses their own established set of red flags.
A. True
B. False
False
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?
They could be required to pay a fine of up to $41,484 per day, per violation
Which Act does Regulation Z implement?
Truth in Lending Act
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:
,That's the "cost of credit" as a yearly rate.
How are deferred down payments treated under Truth in Lending Act and Regulation Z?
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
TRUE
The Truth In Lending Act (TILA) is implemented by Regulation Z? TRUE ? FALSE
, 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
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?
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
If an installment sale advertisement includes any one of the triggering terms, which of the
following must also be included in the ad?
Questions and Answers| Latest Update 2026/
2027 | Graded A+ | 100% Correct.
Which of the following disclosures are required by the Consumer Leasing Act/Reg. M to be on a
lease agreement?
· 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
Which if any of the items listed below is NOT a mandated TILA-box disclosure? An
Assignment Statement - the Finance Source accepting assignment
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? 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
Why is the Buy Rate Marked up for Dealer-arranged Financing?
The transaction origination expense
The servicing expense - the costs incurred servicing the loan - collecting the payments, customer
service, etc.
Securing the money-to-lend expense - the cost of acquiring money to lend.
A dealer does not need an Identity Theft Prevention Program if the dealer processes all requests
for credit through a credit portal that uses their own established set of red flags.
A. True
B. False
False
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?
They could be required to pay a fine of up to $41,484 per day, per violation
Which Act does Regulation Z implement?
Truth in Lending Act
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:
,That's the "cost of credit" as a yearly rate.
How are deferred down payments treated under Truth in Lending Act and Regulation Z?
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
TRUE
The Truth In Lending Act (TILA) is implemented by Regulation Z? TRUE ? FALSE
, 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
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?
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
If an installment sale advertisement includes any one of the triggering terms, which of the
following must also be included in the ad?
