NADA
Car Dealer License
COMPLETE TEST GUIDE
©2024/2025
,1. What is the primary purpose of the Federal Trade
Commission (FTC) in relation to automotive sales?
- A) Regulating vehicle quality
- B) Protecting consumers against unfair practices
- C) Setting manufacturer prices
- D) Managing vehicle registration
- Correct Answer: B
- Rationale: The FTC's role is to protect consumers by
preventing deceptive or unfair practices in the marketplace,
including automotive sales.
2. Which of the following regulations specifically addresses the
disclosure of dealer fees?
- A) Truth in Lending Act
- B) Magnuson-Moss Warranty Act
- C) Fair Credit Reporting Act
- D) Consumer Leasing Act
- Correct Answer: A
- Rationale: The Truth in Lending Act mandates clear
disclosure of all costs and fees associated with financing a vehicle.
©2024/2025
, 3. How often must a car dealer renew their dealer license in most
states?
- A) Annually
- B) Biennially
- C) Every five years
- D) No renewals needed
- Correct Answer: A
- Rationale: Most states require car dealers to renew their
licenses annually to ensure compliance with evolving regulations.
### Sales and Marketing
4. Which advertising strategy is prohibited under the FTC’s
guidelines for automotive dealers?
- A) Offering discounts
- B) Bait-and-switch tactics
- C) Utilizing social media
- D) Testimonials from customers
- Correct Answer: B
- Rationale: Bait-and-switch tactics, where a dealer lures
customers with a low-priced vehicle that is unavailable, are
considered deceptive and prohibited.
©2024/2025
Car Dealer License
COMPLETE TEST GUIDE
©2024/2025
,1. What is the primary purpose of the Federal Trade
Commission (FTC) in relation to automotive sales?
- A) Regulating vehicle quality
- B) Protecting consumers against unfair practices
- C) Setting manufacturer prices
- D) Managing vehicle registration
- Correct Answer: B
- Rationale: The FTC's role is to protect consumers by
preventing deceptive or unfair practices in the marketplace,
including automotive sales.
2. Which of the following regulations specifically addresses the
disclosure of dealer fees?
- A) Truth in Lending Act
- B) Magnuson-Moss Warranty Act
- C) Fair Credit Reporting Act
- D) Consumer Leasing Act
- Correct Answer: A
- Rationale: The Truth in Lending Act mandates clear
disclosure of all costs and fees associated with financing a vehicle.
©2024/2025
, 3. How often must a car dealer renew their dealer license in most
states?
- A) Annually
- B) Biennially
- C) Every five years
- D) No renewals needed
- Correct Answer: A
- Rationale: Most states require car dealers to renew their
licenses annually to ensure compliance with evolving regulations.
### Sales and Marketing
4. Which advertising strategy is prohibited under the FTC’s
guidelines for automotive dealers?
- A) Offering discounts
- B) Bait-and-switch tactics
- C) Utilizing social media
- D) Testimonials from customers
- Correct Answer: B
- Rationale: Bait-and-switch tactics, where a dealer lures
customers with a low-priced vehicle that is unavailable, are
considered deceptive and prohibited.
©2024/2025
