AFIP CERTIFICATION UPDATED FINAL EXAM QUESTIONS
AND ANSWERS SURE A+
✔✔The criminal penalties for violating the CLA and Reg. M can result in a fine of up to
_______ and up to _______ year(s) in jail or both. - ✔✔$5,000/one
✔✔A(n) _______ is money paid by the lessee to the lessor to cover the cost of any
deficiency as mandated by the agreement and any funds not collected are returned to
the lessee at the termination of the lease. - ✔✔Security Deposit
✔✔(True/False) The following lease terms will vary depending on state regulation or
lessor requirements: 1) the mandated state and federal lease disclosures, 2) the
assessment and impact on the vehicle of sales, usage, local taxes and lease-related
property taxes, 3) the mandated insurance coverage - minimum and maximum
requirements, 4) posted mileage assessments and excess mileage fees, 5) excess
wear and damage standards and liability assessments, 6) restrictions as to use of the
vehicle, 7) maintenance - ✔✔True
✔✔If a lessee is responsible at the end of the lease for the difference between the
residual value of the vehicle and its actual cash value or realized value, this individual
entered into a(n) _______ lease. - ✔✔Open-End
✔✔If a lessee has the option to purchase the vehicle at the end of the lease, what
information must be recorded in the lease contract? - ✔✔-Price
-Price option fee
✔✔The _______ is the difference between the amount entered as the gross capitalized
cost less the amount posted as the capitalized cost reduction. - ✔✔Adjusted Cap Cost
✔✔If not included in the amortized amount or gross capitalized cost, property taxes are
the responsibility of the _______ and paid _______. - ✔✔Lessee, Annually
✔✔(True/False) The amount due at lease signing does NOT need to be itemized. -
✔✔False
✔✔The _______ represents the agreed-upon value of the vehicle being leased and the
cost of any products, services, fees or outstanding balances that will be paid as part of
the monthly lease payments over the term of the lease. - ✔✔Gross Capitalized Cost
✔✔(True/False) Unlike an installment sale agreement, an F&I manager is allowed to
record a negative amount on a lease contract in the case of negative equity. - ✔✔False
,✔✔(True/False) If circumstances require that a second lease agreement be executed -
the customer must be re-contracted - the date recorded on the second agreement must
be the date of the original contract. - ✔✔False
✔✔(True/False) In cases in which the lease is not regulated by the CLA or Reg. M, best
practices dictate completing the transaction as if it was governed by the CLA and Reg.
M. - ✔✔True
✔✔What are the three components of a lease payment? - ✔✔1. Depreciation
2. Amortized Amounts
3. Rent Charge
✔✔You may be able to remedy a violation of the CLA or Reg. M if, within _______ days
of discovering an error (and before being sued by the customer for the error), you notify
the customer of the error and make the necessary adjustments to the customer's
account to assure that the customer 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
✔✔(True/False) Almost all states have laws that require disclosures above and beyond
the disclosures already required by Regulation M that are just as binding as the federal
rules. - ✔✔True
✔✔What does the following describe? "The amount determined at the inception of the
lease to be the value of the vehicle at the end of the agreement." This figure is
subtracted from the adjusted capitalized cost to determine the amount of depreciation in
the value of the vehicle that will occur over the term of the lease. - ✔✔Residual Value
✔✔(True/False) The CLA and Reg. M disclosures must be made prior to consummation
in a form the lessee can keep. - ✔✔True
✔✔(True/False) When completing the "Amount Due at Lease Signing or Delivery"
section of a lease agreement, it's permissible to enter a single amount that represents
the total of the various amounts that will be due and payable when the contract is
executed. - ✔✔False
✔✔Which act does Regulation M implement? - ✔✔Consumer Leasing Act
✔✔A lease agreement in which the lessee's liability at the end of term is limited to
excessive wear and excess mileage charges is a(n) _______ lease. - ✔✔Closed-end
✔✔Unlike an installment sale agreement, a lease agreement lists the _______ on the
left and the _______ on the right. - ✔✔Lessor, Lessee
,✔✔The _______ includes any amounts, such as the net value of a trade-in, factory
rebate or cash, that reduce the gross capitalized cost. - ✔✔Capitalized Cost Reduction
✔✔(True/False) According to the Consumer Leasing Act, a lessor may extend an
existing lease without new
disclosures on a month-to-month basis so long as the maximum term is six months or
less. - ✔✔True
✔✔(True/False) A customer wishes to pay for a used car with four cashier's checks
drawn on four different banks in the amounts of $7,500, $6,800, $3,000, and $8,300.
Since none of the checks exceeds $10,000, the F&I person need not complete IRS /
FinCEN Form 8300. - ✔✔False
✔✔A customer buying a new car is paying $5,000 cash down and owes $7,500 more on
the trade-in than was allowed. In this case, the postings on the installment sale
agreement can be: - ✔✔a. a downpayment of zero and an additional amount financed
of $2,500.
OR
b. a downpayment of $5,000 and an additional amount financed of $7,500.
✔✔The purpose of Regulation Z - ✔✔To allow people to compare the cost of credit.
✔✔Are there any defenses to a civil claim for a violation of TILA or Reg. Z? - ✔✔Yes.
1. "bona fide error" defense; and
2. "safe harbor"
✔✔Bona fide error defense - ✔✔A creditor claiming this defense must show by a
"preponderance of evidence" that the violation was not intentional and resulted from a
bona fide error. (Ex., clerical & calculation errors, computer malfunctions, programming
problems and printing errors.)
✔✔Safe Harbor - ✔✔If the creditor relied in good faith on "any rule, regulation or
interpretation thereof by the Bureau or in conformity with any interpretation or approval
by an official or employee of the Federal Reserve System duly authorized by the Bureau
to issue such interpretations or approvals under such procedures as the Bureau may
prescribe."
✔✔The "lessor" is the ____________. - ✔✔Dealer
✔✔The "lessee" is the ___________. - ✔✔Consumer
✔✔What is the Consumer Leasing Act? - ✔✔A federal law that requires lessors to make
disclosures to consumers about the cost and terms of the leases.
, ✔✔Who can change TILA and CLA? - ✔✔Only Congress has the authority to change
TILA and the CLA.
✔✔What does the FRB and CFPB constitute as an advertisement? - ✔✔-Messages in a
newspaper, magazine, leaflet, flyer or catalog
-Radio, TV, or public address system announcements
-Internet messages
-Direct Mail
-Exterior and interior signs
-Point-of-sale/lease displays
-Telephone solicitations
-Price tags with credit/lease information
-Letters to customers as part of an organized solicitation of business.
✔✔What isn't an advertisement according to the FRB and the CFPB? - ✔✔-Direct
personal contacts
-Follow-up letters to consumers
-Oral or written communications relating to the negotiation of a specific transaction
✔✔ECOA - ✔✔Equal Credit Opportunity Act
✔✔Required TILA disclosures - ✔✔-APR
-Finance Charge
-Amount financed
-Total selling price or the deferred contract price
-Dates of the payments
-Amount of payments -- also, the balloon payment, if applicable
-Number of payments
✔✔Advertisment - ✔✔A commercial message in any medium that promotes directly or
indirectly a credit transaction.
✔✔FCRA - ✔✔Fair Credit Reporting Act
✔✔Adverse Action - ✔✔The denial of a request for credit relative to the dollar amounts,
APR, and terms contained in the verbal or written application. Note that the test extends
beyond the initial turndown. If a counteroffer is made containing less advantageous
terms and conditions, and the customer doesn't accept the counteroffer, this also
qualifies as an adverse action.
✔✔Conditions under which the ECOA requires the issuing of an Adverse Action Notice:
(If any of the situations below occur, an Adverse Action Notice must be issued.) - ✔✔•
Based on the information provided in a credit application, whether received in person or
AND ANSWERS SURE A+
✔✔The criminal penalties for violating the CLA and Reg. M can result in a fine of up to
_______ and up to _______ year(s) in jail or both. - ✔✔$5,000/one
✔✔A(n) _______ is money paid by the lessee to the lessor to cover the cost of any
deficiency as mandated by the agreement and any funds not collected are returned to
the lessee at the termination of the lease. - ✔✔Security Deposit
✔✔(True/False) The following lease terms will vary depending on state regulation or
lessor requirements: 1) the mandated state and federal lease disclosures, 2) the
assessment and impact on the vehicle of sales, usage, local taxes and lease-related
property taxes, 3) the mandated insurance coverage - minimum and maximum
requirements, 4) posted mileage assessments and excess mileage fees, 5) excess
wear and damage standards and liability assessments, 6) restrictions as to use of the
vehicle, 7) maintenance - ✔✔True
✔✔If a lessee is responsible at the end of the lease for the difference between the
residual value of the vehicle and its actual cash value or realized value, this individual
entered into a(n) _______ lease. - ✔✔Open-End
✔✔If a lessee has the option to purchase the vehicle at the end of the lease, what
information must be recorded in the lease contract? - ✔✔-Price
-Price option fee
✔✔The _______ is the difference between the amount entered as the gross capitalized
cost less the amount posted as the capitalized cost reduction. - ✔✔Adjusted Cap Cost
✔✔If not included in the amortized amount or gross capitalized cost, property taxes are
the responsibility of the _______ and paid _______. - ✔✔Lessee, Annually
✔✔(True/False) The amount due at lease signing does NOT need to be itemized. -
✔✔False
✔✔The _______ represents the agreed-upon value of the vehicle being leased and the
cost of any products, services, fees or outstanding balances that will be paid as part of
the monthly lease payments over the term of the lease. - ✔✔Gross Capitalized Cost
✔✔(True/False) Unlike an installment sale agreement, an F&I manager is allowed to
record a negative amount on a lease contract in the case of negative equity. - ✔✔False
,✔✔(True/False) If circumstances require that a second lease agreement be executed -
the customer must be re-contracted - the date recorded on the second agreement must
be the date of the original contract. - ✔✔False
✔✔(True/False) In cases in which the lease is not regulated by the CLA or Reg. M, best
practices dictate completing the transaction as if it was governed by the CLA and Reg.
M. - ✔✔True
✔✔What are the three components of a lease payment? - ✔✔1. Depreciation
2. Amortized Amounts
3. Rent Charge
✔✔You may be able to remedy a violation of the CLA or Reg. M if, within _______ days
of discovering an error (and before being sued by the customer for the error), you notify
the customer of the error and make the necessary adjustments to the customer's
account to assure that the customer 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
✔✔(True/False) Almost all states have laws that require disclosures above and beyond
the disclosures already required by Regulation M that are just as binding as the federal
rules. - ✔✔True
✔✔What does the following describe? "The amount determined at the inception of the
lease to be the value of the vehicle at the end of the agreement." This figure is
subtracted from the adjusted capitalized cost to determine the amount of depreciation in
the value of the vehicle that will occur over the term of the lease. - ✔✔Residual Value
✔✔(True/False) The CLA and Reg. M disclosures must be made prior to consummation
in a form the lessee can keep. - ✔✔True
✔✔(True/False) When completing the "Amount Due at Lease Signing or Delivery"
section of a lease agreement, it's permissible to enter a single amount that represents
the total of the various amounts that will be due and payable when the contract is
executed. - ✔✔False
✔✔Which act does Regulation M implement? - ✔✔Consumer Leasing Act
✔✔A lease agreement in which the lessee's liability at the end of term is limited to
excessive wear and excess mileage charges is a(n) _______ lease. - ✔✔Closed-end
✔✔Unlike an installment sale agreement, a lease agreement lists the _______ on the
left and the _______ on the right. - ✔✔Lessor, Lessee
,✔✔The _______ includes any amounts, such as the net value of a trade-in, factory
rebate or cash, that reduce the gross capitalized cost. - ✔✔Capitalized Cost Reduction
✔✔(True/False) According to the Consumer Leasing Act, a lessor may extend an
existing lease without new
disclosures on a month-to-month basis so long as the maximum term is six months or
less. - ✔✔True
✔✔(True/False) A customer wishes to pay for a used car with four cashier's checks
drawn on four different banks in the amounts of $7,500, $6,800, $3,000, and $8,300.
Since none of the checks exceeds $10,000, the F&I person need not complete IRS /
FinCEN Form 8300. - ✔✔False
✔✔A customer buying a new car is paying $5,000 cash down and owes $7,500 more on
the trade-in than was allowed. In this case, the postings on the installment sale
agreement can be: - ✔✔a. a downpayment of zero and an additional amount financed
of $2,500.
OR
b. a downpayment of $5,000 and an additional amount financed of $7,500.
✔✔The purpose of Regulation Z - ✔✔To allow people to compare the cost of credit.
✔✔Are there any defenses to a civil claim for a violation of TILA or Reg. Z? - ✔✔Yes.
1. "bona fide error" defense; and
2. "safe harbor"
✔✔Bona fide error defense - ✔✔A creditor claiming this defense must show by a
"preponderance of evidence" that the violation was not intentional and resulted from a
bona fide error. (Ex., clerical & calculation errors, computer malfunctions, programming
problems and printing errors.)
✔✔Safe Harbor - ✔✔If the creditor relied in good faith on "any rule, regulation or
interpretation thereof by the Bureau or in conformity with any interpretation or approval
by an official or employee of the Federal Reserve System duly authorized by the Bureau
to issue such interpretations or approvals under such procedures as the Bureau may
prescribe."
✔✔The "lessor" is the ____________. - ✔✔Dealer
✔✔The "lessee" is the ___________. - ✔✔Consumer
✔✔What is the Consumer Leasing Act? - ✔✔A federal law that requires lessors to make
disclosures to consumers about the cost and terms of the leases.
, ✔✔Who can change TILA and CLA? - ✔✔Only Congress has the authority to change
TILA and the CLA.
✔✔What does the FRB and CFPB constitute as an advertisement? - ✔✔-Messages in a
newspaper, magazine, leaflet, flyer or catalog
-Radio, TV, or public address system announcements
-Internet messages
-Direct Mail
-Exterior and interior signs
-Point-of-sale/lease displays
-Telephone solicitations
-Price tags with credit/lease information
-Letters to customers as part of an organized solicitation of business.
✔✔What isn't an advertisement according to the FRB and the CFPB? - ✔✔-Direct
personal contacts
-Follow-up letters to consumers
-Oral or written communications relating to the negotiation of a specific transaction
✔✔ECOA - ✔✔Equal Credit Opportunity Act
✔✔Required TILA disclosures - ✔✔-APR
-Finance Charge
-Amount financed
-Total selling price or the deferred contract price
-Dates of the payments
-Amount of payments -- also, the balloon payment, if applicable
-Number of payments
✔✔Advertisment - ✔✔A commercial message in any medium that promotes directly or
indirectly a credit transaction.
✔✔FCRA - ✔✔Fair Credit Reporting Act
✔✔Adverse Action - ✔✔The denial of a request for credit relative to the dollar amounts,
APR, and terms contained in the verbal or written application. Note that the test extends
beyond the initial turndown. If a counteroffer is made containing less advantageous
terms and conditions, and the customer doesn't accept the counteroffer, this also
qualifies as an adverse action.
✔✔Conditions under which the ECOA requires the issuing of an Adverse Action Notice:
(If any of the situations below occur, an Adverse Action Notice must be issued.) - ✔✔•
Based on the information provided in a credit application, whether received in person or
