AFIP Certification Exam Prep
2025/2026: A+ Graded Study Guide
with Verified Questions and Answers
for a Guaranteed First-Time Pass
(True/False): Ignorance of the law will shield you from liability if you are noncompliant. -
correct answers--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 answers--
True
In a typical credit transaction the (bank)/(dealer) is the creditor. - correct answers--The
dealer is the creditor
,What is a contract? - correct answers--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 answers--1. Offer
2. Acceptance
3. Consideration
An offer consists of three elements: - correct answers--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 answers--1. An act of the parties
2. The operation of law
There are three criteria for the acceptance of an offer: - correct answers--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 answers--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 answers--$500
What is required in order for the parties (the individuals entering into the contract) to
have "legal capacity?" - correct answers--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 answers--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 answers--The requirement
that each party to the contract receives something of value in exchange for what is
given.
Finance Charge - correct answers--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 answers--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 answers--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 answers--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
answers--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 answers--Manufacturer's
A(n) _______ clause allows the creditor to declare the entire outstanding balance due
and payable. - correct answers--Acceleration
As recorded on an installment sale agreement, the total sale price or deferred contract
price would be the total of the ________. - correct answers---Payments
-Downpayment
-Net Trade-In
Which is NOT listed as a mandated TILA box disclosure? - correct answers--Holder-in-
Due Course Notice
In most states, the _______ is deemed to be part of the purchase agreement. - correct
answers--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 answers--False
, At the time of consummation, an installment sale contract is between the _______ and
the _______. - correct answers--Customer, Dealer
The Truth in Lending Act and Reg. Z govern installment sale transactions for vehicles
purchased for what type(s) of uses? - correct answers--Personal, Family or Household
What is always the largest number on an installment sale agreement? - correct
answers--The total sale price
What does "force-placed" or "creditor-placed" mean? - correct answers--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 answers--True
How are installment sale contracts regulated? - correct answers--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 answers--True
Closed-End Credit - correct answers--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 answers--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 answers--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 answers--The cost of credit (finance charge) is
calculated upfront when the agreement is computed and repaid monthly over its term.
2025/2026: A+ Graded Study Guide
with Verified Questions and Answers
for a Guaranteed First-Time Pass
(True/False): Ignorance of the law will shield you from liability if you are noncompliant. -
correct answers--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 answers--
True
In a typical credit transaction the (bank)/(dealer) is the creditor. - correct answers--The
dealer is the creditor
,What is a contract? - correct answers--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 answers--1. Offer
2. Acceptance
3. Consideration
An offer consists of three elements: - correct answers--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 answers--1. An act of the parties
2. The operation of law
There are three criteria for the acceptance of an offer: - correct answers--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 answers--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 answers--$500
What is required in order for the parties (the individuals entering into the contract) to
have "legal capacity?" - correct answers--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 answers--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 answers--The requirement
that each party to the contract receives something of value in exchange for what is
given.
Finance Charge - correct answers--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 answers--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 answers--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 answers--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
answers--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 answers--Manufacturer's
A(n) _______ clause allows the creditor to declare the entire outstanding balance due
and payable. - correct answers--Acceleration
As recorded on an installment sale agreement, the total sale price or deferred contract
price would be the total of the ________. - correct answers---Payments
-Downpayment
-Net Trade-In
Which is NOT listed as a mandated TILA box disclosure? - correct answers--Holder-in-
Due Course Notice
In most states, the _______ is deemed to be part of the purchase agreement. - correct
answers--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 answers--False
, At the time of consummation, an installment sale contract is between the _______ and
the _______. - correct answers--Customer, Dealer
The Truth in Lending Act and Reg. Z govern installment sale transactions for vehicles
purchased for what type(s) of uses? - correct answers--Personal, Family or Household
What is always the largest number on an installment sale agreement? - correct
answers--The total sale price
What does "force-placed" or "creditor-placed" mean? - correct answers--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 answers--True
How are installment sale contracts regulated? - correct answers--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 answers--True
Closed-End Credit - correct answers--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 answers--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 answers--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 answers--The cost of credit (finance charge) is
calculated upfront when the agreement is computed and repaid monthly over its term.
