AFIP Basic Certification Exam V1 Questions
and accurate Answers Update 2025 Grade A+
(100% Correct)
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?
There is a government requirement for an advertisement, that if you mention certain terms in the
ad known as triggering terms, then you must include all of the triggered terms.
As stated in the Truth in Lending Act - Reg. Z the triggering terms for an installment sale ad are:
· The amount or percentage of any downpayment
· The number of payments or contract term
· The amount of any payment
· The dollar amount of any finance charge.
Which of the following are not Truth in Lending Act or Reg. Z disclosure box items?
he cost of the extended service agreement is not a Truth in Lending - Reg Z disclosure.
THE REQUIRED TILA BOX DISCLOSURES ARE:
The creditor's identity/the amount financed/an itemization of the amount financed/the finance
charge/the annual percentage rate/the repayment schedule/the total of the payments/the total sale
price (the largest number on the contact)/a prepayment statement/late charges provisions/the
dealer will acquire a security interest (lien) on the vehicle/the need to provide insurance/a
statement to refer to the document for additional information.
The total sale price is the largest number on the installment contract
ALWAYS
Which of the following does the Federal Trade Commission (FTC) consider advertisements?
A. Social media (facebook, instagram, Twitter, Tik Tok, etc.)
B. Messages in newspapers, magazines, leaflets, flyers, a catalog, price tags with credit
information
C. Radio, TV, or public address system announcements, interior and exterior signs
D. Internet, fax, email, and telephone solicitations
E. Direct mail and letters to customers as part of an organized solicitation of business
,Which if any of the items listed below is NOT a mandated TILA-box disclosure?
An Assignment Statement - the Finance Source accepting assignment
If a customer is re-contracted five days after the original agreement was executed, how should
the second agreement be treated?
As an entirely new agreement, with the date the second contract is executed recorded on the
installment sale agreement
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?
and accurate Answers Update 2025 Grade A+
(100% Correct)
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?
There is a government requirement for an advertisement, that if you mention certain terms in the
ad known as triggering terms, then you must include all of the triggered terms.
As stated in the Truth in Lending Act - Reg. Z the triggering terms for an installment sale ad are:
· The amount or percentage of any downpayment
· The number of payments or contract term
· The amount of any payment
· The dollar amount of any finance charge.
Which of the following are not Truth in Lending Act or Reg. Z disclosure box items?
he cost of the extended service agreement is not a Truth in Lending - Reg Z disclosure.
THE REQUIRED TILA BOX DISCLOSURES ARE:
The creditor's identity/the amount financed/an itemization of the amount financed/the finance
charge/the annual percentage rate/the repayment schedule/the total of the payments/the total sale
price (the largest number on the contact)/a prepayment statement/late charges provisions/the
dealer will acquire a security interest (lien) on the vehicle/the need to provide insurance/a
statement to refer to the document for additional information.
The total sale price is the largest number on the installment contract
ALWAYS
Which of the following does the Federal Trade Commission (FTC) consider advertisements?
A. Social media (facebook, instagram, Twitter, Tik Tok, etc.)
B. Messages in newspapers, magazines, leaflets, flyers, a catalog, price tags with credit
information
C. Radio, TV, or public address system announcements, interior and exterior signs
D. Internet, fax, email, and telephone solicitations
E. Direct mail and letters to customers as part of an organized solicitation of business
,Which if any of the items listed below is NOT a mandated TILA-box disclosure?
An Assignment Statement - the Finance Source accepting assignment
If a customer is re-contracted five days after the original agreement was executed, how should
the second agreement be treated?
As an entirely new agreement, with the date the second contract is executed recorded on the
installment sale agreement
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?
