AFIP Basic Certification Actual Exam
AFIP Basic Certification Actual Exam Newest
AFIP Basic Certification Exam
Preparation/AFIP Basic Certification Practice
Exam With Complete Questions And Correct
Answers
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
A+ TEST BANK 1
, AFIP Basic Certification Actual Exam
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
amount of the premium must be added to the finance charge and computed as part of the APR. -
Correct Answer :False
A dealer may provide TILA and Reg. Z disclosures in any language, but they are required to be
made in _______ upon the customer's request. - Correct Answer :English
Triggering terms on an advertisement for an installment sale - Correct Answer :1) The amount or
percentage of any downpayment
A+ TEST BANK 2
, AFIP Basic Certification Actual Exam
2) The number of payments or period of repayment
3) The amount of any payment
4) The amount of any finance charge
If any triggering terms are used, an ad must also contain: - Correct Answer :-The amount or
percentage of the downpayment
-The terms of repayment; the number of payments and amount of the payments
-The annual percentage rate stated as APR
To avoid civil liability, an F&I manager can, within _______ days of discovering the error (and
before being sued by the customer for the error), notify the customer of the error and make the
necessary adjustments to ensure he will not be required to pay an amount in excess of the
charge actually disclosed or the dollar equivalent of the APR actually disclosed, whichever is less.
- Correct Answer :60
The criminal penalties for violating TILA and Reg. Z can result in a fine of up to _______ and up to
_______ in jail, or both. - Correct Answer :$5,000/One year
(True/False) While it's up to dealership management, best practices dictate that you document a
transaction that doesn't require TILA disclosures as if it did. - Correct Answer :True
(True/False) TILA and Reg. Z grant consumers the right to rescind a vehicle installment sale
contract. - Correct Answer :False
The total sale price or deferred contract price is _______ the largest number on the installment
contract. - Correct Answer :Always
(True/False) A creditor can claim a bona fide error defense for a violation of TILA or Reg. Z as
long as it can prove by a preponderance of evidence that the violation was not intentional and it
had maintained procedures reasonably adapted to avoid such an error. - Correct Answer :True
A+ TEST BANK 3
, AFIP Basic Certification Actual Exam
Are there state laws that require TILA and Reg. Z disclosures, even when the federal government
doesn't? - Correct Answer :Yes
If a customer is re-contracted five days after the original agreement was executed, how should
the second agreement be treated? - Correct Answer :You should re-contract the transaction as
of the date of re-contracting, recalculating all deal terms and disclosures as if the re-contracting
were a completely new transaction.
According to TILA and Reg. Z, with the exception of rules regarding advertisements, dealers must
maintain evidence of the TILA and Reg. Z disclosures (copies of the installment sale contracts) for
_______. - Correct Answer :Two years after the date disclosures are required to be made or
action is required to be taken.
Heather receives a cease and desist order for an ad she ran that violated TILA and Reg. Z. If she
continues to run the ad, what are the potential penalties? - Correct Answer :Initial violations are
subject to the FTC's "cease and desist" (C&D) actions. Subsequent violations of that C&D order
can expose a dealer to fines of up to $16,000 per day, per violation.
Which regulation implements the Truth in Lending Act? - Correct Answer :Regulation Z
(True/False) In any discussion or representation to a prospective or committed customer
regarding the cost of credit - oral discussions, advertisements, installment sale contracts - the
term "APR" or "annual percentage rate" should be used. - Correct Answer :True
Which types of practices does the Federal Trade Commission Act address as it relates to
advertising? - Correct Answer :Unfair and Deceptive
If a dealership runs a monthly payment ad in which the payment and terms only apply to one or
two of the vehicles offered for sale (and that is not specifically stated in the ad), it is running a
_______ ad. - Correct Answer :Bait-and-Switch
A+ TEST BANK 4
AFIP Basic Certification Actual Exam Newest
AFIP Basic Certification Exam
Preparation/AFIP Basic Certification Practice
Exam With Complete Questions And Correct
Answers
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
A+ TEST BANK 1
, AFIP Basic Certification Actual Exam
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
amount of the premium must be added to the finance charge and computed as part of the APR. -
Correct Answer :False
A dealer may provide TILA and Reg. Z disclosures in any language, but they are required to be
made in _______ upon the customer's request. - Correct Answer :English
Triggering terms on an advertisement for an installment sale - Correct Answer :1) The amount or
percentage of any downpayment
A+ TEST BANK 2
, AFIP Basic Certification Actual Exam
2) The number of payments or period of repayment
3) The amount of any payment
4) The amount of any finance charge
If any triggering terms are used, an ad must also contain: - Correct Answer :-The amount or
percentage of the downpayment
-The terms of repayment; the number of payments and amount of the payments
-The annual percentage rate stated as APR
To avoid civil liability, an F&I manager can, within _______ days of discovering the error (and
before being sued by the customer for the error), notify the customer of the error and make the
necessary adjustments to ensure he will not be required to pay an amount in excess of the
charge actually disclosed or the dollar equivalent of the APR actually disclosed, whichever is less.
- Correct Answer :60
The criminal penalties for violating TILA and Reg. Z can result in a fine of up to _______ and up to
_______ in jail, or both. - Correct Answer :$5,000/One year
(True/False) While it's up to dealership management, best practices dictate that you document a
transaction that doesn't require TILA disclosures as if it did. - Correct Answer :True
(True/False) TILA and Reg. Z grant consumers the right to rescind a vehicle installment sale
contract. - Correct Answer :False
The total sale price or deferred contract price is _______ the largest number on the installment
contract. - Correct Answer :Always
(True/False) A creditor can claim a bona fide error defense for a violation of TILA or Reg. Z as
long as it can prove by a preponderance of evidence that the violation was not intentional and it
had maintained procedures reasonably adapted to avoid such an error. - Correct Answer :True
A+ TEST BANK 3
, AFIP Basic Certification Actual Exam
Are there state laws that require TILA and Reg. Z disclosures, even when the federal government
doesn't? - Correct Answer :Yes
If a customer is re-contracted five days after the original agreement was executed, how should
the second agreement be treated? - Correct Answer :You should re-contract the transaction as
of the date of re-contracting, recalculating all deal terms and disclosures as if the re-contracting
were a completely new transaction.
According to TILA and Reg. Z, with the exception of rules regarding advertisements, dealers must
maintain evidence of the TILA and Reg. Z disclosures (copies of the installment sale contracts) for
_______. - Correct Answer :Two years after the date disclosures are required to be made or
action is required to be taken.
Heather receives a cease and desist order for an ad she ran that violated TILA and Reg. Z. If she
continues to run the ad, what are the potential penalties? - Correct Answer :Initial violations are
subject to the FTC's "cease and desist" (C&D) actions. Subsequent violations of that C&D order
can expose a dealer to fines of up to $16,000 per day, per violation.
Which regulation implements the Truth in Lending Act? - Correct Answer :Regulation Z
(True/False) In any discussion or representation to a prospective or committed customer
regarding the cost of credit - oral discussions, advertisements, installment sale contracts - the
term "APR" or "annual percentage rate" should be used. - Correct Answer :True
Which types of practices does the Federal Trade Commission Act address as it relates to
advertising? - Correct Answer :Unfair and Deceptive
If a dealership runs a monthly payment ad in which the payment and terms only apply to one or
two of the vehicles offered for sale (and that is not specifically stated in the ad), it is running a
_______ ad. - Correct Answer :Bait-and-Switch
A+ TEST BANK 4
