AFIP CERTIFICATION 2026 ALL QUESTIONS AND ANSWERS
SURE A+
✔✔(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
✔✔At the time of consummation, an installment sale contract is between the _______
and the _______. - ✔✔Customer, Dealer
✔✔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
✔✔What is always the largest number on an installment sale agreement? - ✔✔The total
sale price
✔✔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.
✔✔(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
✔✔How are installment sale contracts regulated? - ✔✔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. - ✔✔True
✔✔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.
✔✔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
✔✔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
✔✔Precomputed Interest - ✔✔The cost of credit (finance charge) is calculated upfront
when the agreement is computed and repaid monthly over its term.
✔✔Simple Interest - ✔✔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 - ✔✔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 - ✔✔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: - ✔✔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. - ✔✔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. - ✔✔English
✔✔Triggering terms on an advertisement for an installment sale - ✔✔1) The amount or
percentage of any downpayment
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: - ✔✔-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. - ✔✔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. - ✔✔$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. - ✔✔True
✔✔(True/False) TILA and Reg. Z grant consumers the right to rescind a vehicle
installment sale contract. - ✔✔False
✔✔The total sale price or deferred contract price is _______ the largest number on the
installment contract. - ✔✔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. - ✔✔True
✔✔Are there state laws that require TILA and Reg. Z disclosures, even when the
federal government doesn't? - ✔✔Yes
✔✔If a customer is re-contracted five days after the original agreement was executed,
how should the second agreement be treated? - ✔✔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 _______. - ✔✔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? - ✔✔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? - ✔✔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. - ✔✔True
✔✔Which types of practices does the Federal Trade Commission Act address as it
relates to advertising? - ✔✔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. - ✔✔Bait-and-Switch
✔✔If a dealership hires an agency that runs advertisements on the dealer's behalf and
those ads are later determined to be in violation of either state or federal advertising
laws, who may be held liable? - ✔✔Both the dealer and the agency
✔✔What truth-in-advertising rules apply to advertisers? - ✔✔-Advertising must be
truthful and non-deceptive
-Advertisers must have evidence to back up their claims
-Advertisements cannot be unfair
✔✔What makes an advertisement deceptive? - ✔✔If an ad contains a statement - or
omits information - that:
-Is likely to mislead consumers acting reasonably under the circumstances
-Is "material" - that is, important to a consumer's decision to buy or use the product
✔✔What makes an advertisement unfair? - ✔✔An ad or business practice is unfair if:
-It causes or is likely to cause substantial consumer injury which a consumer could not
reasonably avoid
-It is not outweighed by the benefit to consumers
✔✔What penalties can be imposed against a company that runs a false or deceptive
ad? - ✔✔-Cease and desist orders; and to pay a fine of $16,000 per day per ad if the
company violates the law in the future.
-Civil penalties, consumer redress and other monetary remedies
-Corrective advertising, disclosures and other informational remedies.
✔✔Lanham Act - ✔✔Gives companies the right to sue their competitors for making
deceptive claims in ads.
✔✔Bait and Switch - ✔✔Advertising a product when the company has no intention of
selling that item, but instead plans to sell a consumer something else, usually at a
higher price.
SURE A+
✔✔(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
✔✔At the time of consummation, an installment sale contract is between the _______
and the _______. - ✔✔Customer, Dealer
✔✔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
✔✔What is always the largest number on an installment sale agreement? - ✔✔The total
sale price
✔✔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.
✔✔(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
✔✔How are installment sale contracts regulated? - ✔✔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. - ✔✔True
✔✔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.
✔✔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
✔✔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
✔✔Precomputed Interest - ✔✔The cost of credit (finance charge) is calculated upfront
when the agreement is computed and repaid monthly over its term.
✔✔Simple Interest - ✔✔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 - ✔✔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 - ✔✔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: - ✔✔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. - ✔✔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. - ✔✔English
✔✔Triggering terms on an advertisement for an installment sale - ✔✔1) The amount or
percentage of any downpayment
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: - ✔✔-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. - ✔✔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. - ✔✔$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. - ✔✔True
✔✔(True/False) TILA and Reg. Z grant consumers the right to rescind a vehicle
installment sale contract. - ✔✔False
✔✔The total sale price or deferred contract price is _______ the largest number on the
installment contract. - ✔✔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. - ✔✔True
✔✔Are there state laws that require TILA and Reg. Z disclosures, even when the
federal government doesn't? - ✔✔Yes
✔✔If a customer is re-contracted five days after the original agreement was executed,
how should the second agreement be treated? - ✔✔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 _______. - ✔✔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? - ✔✔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? - ✔✔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. - ✔✔True
✔✔Which types of practices does the Federal Trade Commission Act address as it
relates to advertising? - ✔✔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. - ✔✔Bait-and-Switch
✔✔If a dealership hires an agency that runs advertisements on the dealer's behalf and
those ads are later determined to be in violation of either state or federal advertising
laws, who may be held liable? - ✔✔Both the dealer and the agency
✔✔What truth-in-advertising rules apply to advertisers? - ✔✔-Advertising must be
truthful and non-deceptive
-Advertisers must have evidence to back up their claims
-Advertisements cannot be unfair
✔✔What makes an advertisement deceptive? - ✔✔If an ad contains a statement - or
omits information - that:
-Is likely to mislead consumers acting reasonably under the circumstances
-Is "material" - that is, important to a consumer's decision to buy or use the product
✔✔What makes an advertisement unfair? - ✔✔An ad or business practice is unfair if:
-It causes or is likely to cause substantial consumer injury which a consumer could not
reasonably avoid
-It is not outweighed by the benefit to consumers
✔✔What penalties can be imposed against a company that runs a false or deceptive
ad? - ✔✔-Cease and desist orders; and to pay a fine of $16,000 per day per ad if the
company violates the law in the future.
-Civil penalties, consumer redress and other monetary remedies
-Corrective advertising, disclosures and other informational remedies.
✔✔Lanham Act - ✔✔Gives companies the right to sue their competitors for making
deceptive claims in ads.
✔✔Bait and Switch - ✔✔Advertising a product when the company has no intention of
selling that item, but instead plans to sell a consumer something else, usually at a
higher price.
