AFIP QUIZ AND ANSWERS WITH COMPLETE
SOLUTIONS VERIFIED
Which of the following disclosures are required by the Consumer Leasing
Act/Reg. M to be on a lease agreement?
· Detailed information regarding the lessee's responsibility for maintaining and servicing
the vehicle
· Excess wear and use standards
· An early termination fee
· The lessee's requirement to provide the vehicle insurance required by the lessor
· Other items not addressed in the question
The APR or Annual Percentage Rate is a mandated disclosure. It must be used in
oral discussions with a customer, in funding-related advertisements, and on the
retail installment sale agreement. A customer asks, what does APR mean? Your
response should be:
That's the "cost of credit" as a yearly rate.
As noted in the Truth in Lending Act and Reg. Z, if the customer owes more on
the trade-in than the used car manager allowed, what should the F&I manager
do?
A. Record the deficiency as a negative down payment.
B. Increase the price of the vehicle and/or the trade-in so the numbers still add up
correctly.
,C. Depending on the situation, either A or B.
D. None of the above
If a Dealer receives a cease and desist order for an ad they ran that violated the
Truth in Lending Act/Reg. Z. If the Dealer continues to run the ad, what are the
potential penalties?
They could be required to pay a fine of up to $41,484 per day, per violation
Which Act does Regulation Z implement?
Truth in Lending Act
How are deferred down payments treated under Truth in Lending Act and
Regulation Z?
A deferred downpayment occurs when the customer commits to a larger dollar amount
than the unencumbered funds he is able to provide at the time the request for credit is
submitted to a finance source. (Also referred to as a "hold-check")
(The customer tenders $3,000 in cash at the time the credit application is completed
and sent to a funding source. However, the customer promises to provide another
$2,000 in cash within five days. The request for credit sent to the funding source
indicates a downpayment of $5,000.)
· The total amount of the deferred downpayment must be paid in full before the second
otherwise regularly scheduled payment. (Before that second direct withdrawal is taken
from the customer's bank account, 100% of the deferred amounts must have been
paid.0
· A finance charge cannot be imposed on the deferred amount. · The deferred amount
cannot be included in the amount financed - it must be recorded (included in) the
,recorded downpayment
· With the exception of California, the deferred downpayment
NOTE:
If the customer provides one or more check to be included in the total amount of money
recorded as the downpayment (hold-checks) all of the checks have to be dated as of
the date of the transaction. You cannot collect "post-dated" checks.
Whenever discussing financing with a prospective customer regarding the cost
of credit, regardless of if it's in an oral discussion, advertisement or during
disclosure on an installment sale contract, the term "APR" or "annual percentage
rate" should be used. TRUE / FALSE
TRUE
According to Regulation Z, it is necessary to disclose APR and the Finance
Charge? TRUE?False
TRUE
The Truth In Lending Act (TILA) is implemented by Regulation Z? TRUE ? FALSE
TRUE
With the exception of some Precomputed Interest contracts used by secondary
finance sources, all other installment sales contracts are simple interest or
interest-bearing contracts. The following is a layman's explanation of a simple
interest installment sale transaction. In a precomputed contract the finance
charge is computed on the assumption the contract will run full term. If the
customer terminates the agreement during the repayment term, he will receive a
refund of the unearned premium.
, In a simple interest- or interest-bearing installment sale agreement, the finance
charge is computed daily and paid monthly throughout the term of the
agreement. If the customer pays-off the vehicle before the scheduled end of the
contract there is unearned finance charge money to refund, but it has been each
month the contract has been in force. There is no refund of the unearned finance
chargE
TRUE /FALSE
TRUE
The term Contract Provisions is a TILA box statement. It alerts the customer to
the important information found on the front and back of the agreement. If in
reading contract provisions, the customer asked you to explain the Acceleration
Clause, your response would be?
A contractual right to accelerate the balance of the installment sale agreement if the
customer fails to make timely monthly payments or to secure and maintain the required
property insurance
There is a government requirement for an advertisement if you mention certain
terms in the ad known as triggering terms then you must include all of another
set of terms known as the triggered terms.
Which of the terms listed below does NOT qualify as triggering term?
The name of the financing source is not a triggered term.
If an installment sale advertisement includes any one of the triggering terms,
which of the following must also be included in the ad?
SOLUTIONS VERIFIED
Which of the following disclosures are required by the Consumer Leasing
Act/Reg. M to be on a lease agreement?
· Detailed information regarding the lessee's responsibility for maintaining and servicing
the vehicle
· Excess wear and use standards
· An early termination fee
· The lessee's requirement to provide the vehicle insurance required by the lessor
· Other items not addressed in the question
The APR or Annual Percentage Rate is a mandated disclosure. It must be used in
oral discussions with a customer, in funding-related advertisements, and on the
retail installment sale agreement. A customer asks, what does APR mean? Your
response should be:
That's the "cost of credit" as a yearly rate.
As noted in the Truth in Lending Act and Reg. Z, if the customer owes more on
the trade-in than the used car manager allowed, what should the F&I manager
do?
A. Record the deficiency as a negative down payment.
B. Increase the price of the vehicle and/or the trade-in so the numbers still add up
correctly.
,C. Depending on the situation, either A or B.
D. None of the above
If a Dealer receives a cease and desist order for an ad they ran that violated the
Truth in Lending Act/Reg. Z. If the Dealer continues to run the ad, what are the
potential penalties?
They could be required to pay a fine of up to $41,484 per day, per violation
Which Act does Regulation Z implement?
Truth in Lending Act
How are deferred down payments treated under Truth in Lending Act and
Regulation Z?
A deferred downpayment occurs when the customer commits to a larger dollar amount
than the unencumbered funds he is able to provide at the time the request for credit is
submitted to a finance source. (Also referred to as a "hold-check")
(The customer tenders $3,000 in cash at the time the credit application is completed
and sent to a funding source. However, the customer promises to provide another
$2,000 in cash within five days. The request for credit sent to the funding source
indicates a downpayment of $5,000.)
· The total amount of the deferred downpayment must be paid in full before the second
otherwise regularly scheduled payment. (Before that second direct withdrawal is taken
from the customer's bank account, 100% of the deferred amounts must have been
paid.0
· A finance charge cannot be imposed on the deferred amount. · The deferred amount
cannot be included in the amount financed - it must be recorded (included in) the
,recorded downpayment
· With the exception of California, the deferred downpayment
NOTE:
If the customer provides one or more check to be included in the total amount of money
recorded as the downpayment (hold-checks) all of the checks have to be dated as of
the date of the transaction. You cannot collect "post-dated" checks.
Whenever discussing financing with a prospective customer regarding the cost
of credit, regardless of if it's in an oral discussion, advertisement or during
disclosure on an installment sale contract, the term "APR" or "annual percentage
rate" should be used. TRUE / FALSE
TRUE
According to Regulation Z, it is necessary to disclose APR and the Finance
Charge? TRUE?False
TRUE
The Truth In Lending Act (TILA) is implemented by Regulation Z? TRUE ? FALSE
TRUE
With the exception of some Precomputed Interest contracts used by secondary
finance sources, all other installment sales contracts are simple interest or
interest-bearing contracts. The following is a layman's explanation of a simple
interest installment sale transaction. In a precomputed contract the finance
charge is computed on the assumption the contract will run full term. If the
customer terminates the agreement during the repayment term, he will receive a
refund of the unearned premium.
, In a simple interest- or interest-bearing installment sale agreement, the finance
charge is computed daily and paid monthly throughout the term of the
agreement. If the customer pays-off the vehicle before the scheduled end of the
contract there is unearned finance charge money to refund, but it has been each
month the contract has been in force. There is no refund of the unearned finance
chargE
TRUE /FALSE
TRUE
The term Contract Provisions is a TILA box statement. It alerts the customer to
the important information found on the front and back of the agreement. If in
reading contract provisions, the customer asked you to explain the Acceleration
Clause, your response would be?
A contractual right to accelerate the balance of the installment sale agreement if the
customer fails to make timely monthly payments or to secure and maintain the required
property insurance
There is a government requirement for an advertisement if you mention certain
terms in the ad known as triggering terms then you must include all of another
set of terms known as the triggered terms.
Which of the terms listed below does NOT qualify as triggering term?
The name of the financing source is not a triggered term.
If an installment sale advertisement includes any one of the triggering terms,
which of the following must also be included in the ad?
