AFIP Certification Questions with Answers
1. (True/False): Ignorance of the law will shield you from liability if you are noncompliant.: False
2. (True/False): As an F&I manager working directly with customers, you are in-dividually responsible for your
actions and what you say to each customer.: True
3. In a typical credit transaction the (bank)/(dealer) is the creditor.: The dealer is the creditor
4. What is a contract?: A contract is an agreement involving a promise or set of promises that the law enforces or protects.
5. The formation of a contract requires three elements:: 1. Otter
2. Acceptance
3. Consideration
6. An offer consists of three elements:: 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 otter to the otteree (in this case, the customer)
7. An offer may be terminated by:: 1. An act of the parties
2. The operation of law
8. There are three criteria for the acceptance of an offer:: 1. The otter 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 otter and, therefore, do not amount to a counterotter
9. The Statute of Frauds: Generally requires that all contracts involving the sale of goods for a price of $500 or more be in writing.
,10. The Statute of Frauds requires a written contract for the sale of goods for a price of or
more.: $500
11. What is required in order for the parties (the individuals entering into the contract) to have "legal capacity?":
The parties to the contract must be of legal age under the laws of the state in which the contract is written.
12. Criteria that can block the formation of a valid contract:: 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
13. What is "consideration" as it applies to a contract?: The requirement that each party to the contract receives something of
value in exchange for what is given.
14. Finance Charge: 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.
15. How the Itemization of Amount Financed is completed: 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
16. 4 Key Sections of an installment sale contract: 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
17. The introductory information and promise to pay contained in Section A of Retail Installment Form: Promise
to Pay - This section outlines the purpose of the transaction and the primary obligations that will be incurred from signing the contract.
18. The difference between full or partial recourse and no recourse assign-ments.: Essentially determines the
length of time, if any, the seller is responsible for the actions of the buyer.
19. Warranty disclaimers do not apply to
warranties on new or used vehicles to which that warranty still applies.: Manufacturer's
20. A(n) clause allows the creditor to declare the entire outstanding balance due and
payable.: Acceleration
21. As recorded on an installment
sale agreement, the total sale price or de-ferred contract price would be the total of the .: -Payments
-Downpayment
-Net Trade-In
22. Which is NOT listed as a mandated TILA box disclosure?: Holder-in-Due Course Notice
23. In most states, the is deemed to be part of the purchase
agreement.-
: Buyer's Guide
24. (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.: False
25. At the time of consummation, an installment sale contract is between the
and the .: Customer, Dealer
, 26. The Truth in Lending Act and Reg. Z govern installment sale transactions for vehicles purchased for what
type(s) of uses?: Personal, Family or Household
27. What is always the largest number on an installment sale agreement?: The total sale price
28. What does "force-placed" or "creditor-placed" mean?: 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.
29. (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.:
True
30. How are installment sale contracts regulated?: By federal and state law
31. (True/False) If the vehicle is declared a total loss, the creditor may claim the proceeds from the
physical damage insurance.: True
32. Closed-End Credit: 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.
33. Closed-End Credit Terminology (Customer Arranged): Transaction -- Loan Document -- Note
Cost of Credit -- Interest
Cost of credit stated as -- APR
Parties to the agreement -- Lender- customer
34. Closed-End Credit Terminology (Dealer Arranged): 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
1. (True/False): Ignorance of the law will shield you from liability if you are noncompliant.: False
2. (True/False): As an F&I manager working directly with customers, you are in-dividually responsible for your
actions and what you say to each customer.: True
3. In a typical credit transaction the (bank)/(dealer) is the creditor.: The dealer is the creditor
4. What is a contract?: A contract is an agreement involving a promise or set of promises that the law enforces or protects.
5. The formation of a contract requires three elements:: 1. Otter
2. Acceptance
3. Consideration
6. An offer consists of three elements:: 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 otter to the otteree (in this case, the customer)
7. An offer may be terminated by:: 1. An act of the parties
2. The operation of law
8. There are three criteria for the acceptance of an offer:: 1. The otter 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 otter and, therefore, do not amount to a counterotter
9. The Statute of Frauds: Generally requires that all contracts involving the sale of goods for a price of $500 or more be in writing.
,10. The Statute of Frauds requires a written contract for the sale of goods for a price of or
more.: $500
11. What is required in order for the parties (the individuals entering into the contract) to have "legal capacity?":
The parties to the contract must be of legal age under the laws of the state in which the contract is written.
12. Criteria that can block the formation of a valid contract:: 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
13. What is "consideration" as it applies to a contract?: The requirement that each party to the contract receives something of
value in exchange for what is given.
14. Finance Charge: 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.
15. How the Itemization of Amount Financed is completed: 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
16. 4 Key Sections of an installment sale contract: 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
17. The introductory information and promise to pay contained in Section A of Retail Installment Form: Promise
to Pay - This section outlines the purpose of the transaction and the primary obligations that will be incurred from signing the contract.
18. The difference between full or partial recourse and no recourse assign-ments.: Essentially determines the
length of time, if any, the seller is responsible for the actions of the buyer.
19. Warranty disclaimers do not apply to
warranties on new or used vehicles to which that warranty still applies.: Manufacturer's
20. A(n) clause allows the creditor to declare the entire outstanding balance due and
payable.: Acceleration
21. As recorded on an installment
sale agreement, the total sale price or de-ferred contract price would be the total of the .: -Payments
-Downpayment
-Net Trade-In
22. Which is NOT listed as a mandated TILA box disclosure?: Holder-in-Due Course Notice
23. In most states, the is deemed to be part of the purchase
agreement.-
: Buyer's Guide
24. (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.: False
25. At the time of consummation, an installment sale contract is between the
and the .: Customer, Dealer
, 26. The Truth in Lending Act and Reg. Z govern installment sale transactions for vehicles purchased for what
type(s) of uses?: Personal, Family or Household
27. What is always the largest number on an installment sale agreement?: The total sale price
28. What does "force-placed" or "creditor-placed" mean?: 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.
29. (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.:
True
30. How are installment sale contracts regulated?: By federal and state law
31. (True/False) If the vehicle is declared a total loss, the creditor may claim the proceeds from the
physical damage insurance.: True
32. Closed-End Credit: 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.
33. Closed-End Credit Terminology (Customer Arranged): Transaction -- Loan Document -- Note
Cost of Credit -- Interest
Cost of credit stated as -- APR
Parties to the agreement -- Lender- customer
34. Closed-End Credit Terminology (Dealer Arranged): 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
