AFIP Final Exam Prep — 300 Questions & Answers
AFIP: ASSOCIATION OF FINANCE & INSURANCE PROFESSIONALS VERIFIED EXAM
QUESTIONS AND ANSWERS - LATEST VERSION 2026/2027
1. What does AFIP stand for?
A) Association of Finance & Insurance Professionals
B) Automotive Finance and Insurance Program
C) Advanced Finance and Insurance Planning
D) American Finance and Insurance Practitioners
✓ Correct Answer: A
2. Which federal law primarily governs the disclosure of credit terms to
consumers in vehicle financing?
A) Equal Credit Opportunity Act
B) Truth in Lending Act (TILA)
C) Fair Credit Reporting Act
D) Gramm-Leach-Bliley Act
✓ Correct Answer: B
3. The annual percentage rate (APR) on a loan represents:
A) The monthly interest rate multiplied by 12
B) The base interest rate charged by the lender
C) The true yearly cost of borrowing including fees and interest
D) The dealer's profit on a finance contract
✓ Correct Answer: C
4. What is the primary purpose of Regulation Z?
A) To implement the Truth in Lending Act
B) To regulate insurance sales
C) To establish dealer reserve limits
D) To control credit bureau reporting
✓ Correct Answer: A
, AFIP Final Exam Prep — 300 Questions & Answers
5. A retail installment sales contract (RISC) is best described as:
A) A lease agreement for a vehicle
B) A contract where the buyer pays for goods over time in installments
C) A simple loan from a bank
D) A warranty contract for vehicle repairs
✓ Correct Answer: B
6. Which of the following is NOT a typical F&I product offered in a
dealership?
A) Extended service contract
B) GAP insurance
C) Credit life insurance
D) Homeowner's insurance
✓ Correct Answer: D
7. The 'money factor' in a lease is equivalent to:
A) The residual value percentage
B) The capitalized cost reduction
C) The interest rate divided by 2,400
D) The monthly depreciation charge
✓ Correct Answer: C
8. What does GAP insurance cover?
A) The difference between what is owed on a vehicle and its actual cash
value after a total loss
B) The cost of routine maintenance
C) Medical expenses after an accident
D) The deductible on a comprehensive claim
✓ Correct Answer: A
9. Which document must be provided to a credit applicant within 3
business days of an adverse action on credit?
A) Credit score disclosure
B) Adverse action notice
C) Privacy notice
D) Right of rescission notice
✓ Correct Answer: B
, AFIP Final Exam Prep — 300 Questions & Answers
10. The Equal Credit Opportunity Act (ECOA) prohibits discrimination
based on:
A) Race and national origin
B) Sex and marital status
C) Age and religion
D) All of the above
✓ Correct Answer: D
SECTION 2: Leasing Fundamentals
11. In a closed-end lease, who bears the risk if the vehicle's residual value
is lower than anticipated?
A) The lessee (customer)
B) The lessor (leasing company)
C) The dealer
D) The manufacturer
✓ Correct Answer: B
12. What is the 'capitalized cost' in a lease?
A) The negotiated price of the vehicle that forms the basis of the lease
B) The monthly payment amount
C) The total amount paid over the lease term
D) The residual value at lease end
✓ Correct Answer: A
13. A lease with a residual value of $18,000 and a capitalized cost of
$30,000 over 36 months has a monthly depreciation of:
A) $500.00
B) $416.67
C) $333.33
D) $250.00
✓ Correct Answer: C
14. What is a 'capitalized cost reduction' in a lease?
A) A fee charged by the lessor
B) A down payment or trade-in equity that reduces the amount being
financed
, AFIP Final Exam Prep — 300 Questions & Answers
C) The first month's payment
D) A security deposit required by the lessor
✓ Correct Answer: B
15. Under the Consumer Leasing Act, lessees must be given the right to:
A) Purchase the vehicle at lease end for a predetermined price (if
included in the agreement)
B) Cancel the lease within 3 days without penalty
C) Return the vehicle early without penalty
D) Refinance the lease as a retail purchase
✓ Correct Answer: A
16. What federal regulation implements the Consumer Leasing Act?
A) Regulation Z
B) Regulation B
C) Regulation E
D) Regulation M
✓ Correct Answer: D
17. Excess mileage charges at lease end are typically based on:
A) A flat fee per month of the lease
B) Cents per mile over the contracted allowance
C) The vehicle's depreciation rate
D) The lender's residual value
✓ Correct Answer: B
18. In an open-end lease, who is responsible if the vehicle's value at end of
term is less than the residual?
A) The lessor
B) The dealer
C) The lessee
D) The insurance company
✓ Correct Answer: C
19. The money factor of 0.00250 converts to an approximate interest rate
of:
A) 6%
B) 5%
C) 4%
AFIP: ASSOCIATION OF FINANCE & INSURANCE PROFESSIONALS VERIFIED EXAM
QUESTIONS AND ANSWERS - LATEST VERSION 2026/2027
1. What does AFIP stand for?
A) Association of Finance & Insurance Professionals
B) Automotive Finance and Insurance Program
C) Advanced Finance and Insurance Planning
D) American Finance and Insurance Practitioners
✓ Correct Answer: A
2. Which federal law primarily governs the disclosure of credit terms to
consumers in vehicle financing?
A) Equal Credit Opportunity Act
B) Truth in Lending Act (TILA)
C) Fair Credit Reporting Act
D) Gramm-Leach-Bliley Act
✓ Correct Answer: B
3. The annual percentage rate (APR) on a loan represents:
A) The monthly interest rate multiplied by 12
B) The base interest rate charged by the lender
C) The true yearly cost of borrowing including fees and interest
D) The dealer's profit on a finance contract
✓ Correct Answer: C
4. What is the primary purpose of Regulation Z?
A) To implement the Truth in Lending Act
B) To regulate insurance sales
C) To establish dealer reserve limits
D) To control credit bureau reporting
✓ Correct Answer: A
, AFIP Final Exam Prep — 300 Questions & Answers
5. A retail installment sales contract (RISC) is best described as:
A) A lease agreement for a vehicle
B) A contract where the buyer pays for goods over time in installments
C) A simple loan from a bank
D) A warranty contract for vehicle repairs
✓ Correct Answer: B
6. Which of the following is NOT a typical F&I product offered in a
dealership?
A) Extended service contract
B) GAP insurance
C) Credit life insurance
D) Homeowner's insurance
✓ Correct Answer: D
7. The 'money factor' in a lease is equivalent to:
A) The residual value percentage
B) The capitalized cost reduction
C) The interest rate divided by 2,400
D) The monthly depreciation charge
✓ Correct Answer: C
8. What does GAP insurance cover?
A) The difference between what is owed on a vehicle and its actual cash
value after a total loss
B) The cost of routine maintenance
C) Medical expenses after an accident
D) The deductible on a comprehensive claim
✓ Correct Answer: A
9. Which document must be provided to a credit applicant within 3
business days of an adverse action on credit?
A) Credit score disclosure
B) Adverse action notice
C) Privacy notice
D) Right of rescission notice
✓ Correct Answer: B
, AFIP Final Exam Prep — 300 Questions & Answers
10. The Equal Credit Opportunity Act (ECOA) prohibits discrimination
based on:
A) Race and national origin
B) Sex and marital status
C) Age and religion
D) All of the above
✓ Correct Answer: D
SECTION 2: Leasing Fundamentals
11. In a closed-end lease, who bears the risk if the vehicle's residual value
is lower than anticipated?
A) The lessee (customer)
B) The lessor (leasing company)
C) The dealer
D) The manufacturer
✓ Correct Answer: B
12. What is the 'capitalized cost' in a lease?
A) The negotiated price of the vehicle that forms the basis of the lease
B) The monthly payment amount
C) The total amount paid over the lease term
D) The residual value at lease end
✓ Correct Answer: A
13. A lease with a residual value of $18,000 and a capitalized cost of
$30,000 over 36 months has a monthly depreciation of:
A) $500.00
B) $416.67
C) $333.33
D) $250.00
✓ Correct Answer: C
14. What is a 'capitalized cost reduction' in a lease?
A) A fee charged by the lessor
B) A down payment or trade-in equity that reduces the amount being
financed
, AFIP Final Exam Prep — 300 Questions & Answers
C) The first month's payment
D) A security deposit required by the lessor
✓ Correct Answer: B
15. Under the Consumer Leasing Act, lessees must be given the right to:
A) Purchase the vehicle at lease end for a predetermined price (if
included in the agreement)
B) Cancel the lease within 3 days without penalty
C) Return the vehicle early without penalty
D) Refinance the lease as a retail purchase
✓ Correct Answer: A
16. What federal regulation implements the Consumer Leasing Act?
A) Regulation Z
B) Regulation B
C) Regulation E
D) Regulation M
✓ Correct Answer: D
17. Excess mileage charges at lease end are typically based on:
A) A flat fee per month of the lease
B) Cents per mile over the contracted allowance
C) The vehicle's depreciation rate
D) The lender's residual value
✓ Correct Answer: B
18. In an open-end lease, who is responsible if the vehicle's value at end of
term is less than the residual?
A) The lessor
B) The dealer
C) The lessee
D) The insurance company
✓ Correct Answer: C
19. The money factor of 0.00250 converts to an approximate interest rate
of:
A) 6%
B) 5%
C) 4%
