AFIP AFIP Credit and Lending Products 2

Question 1

What is the purpose of a co-signer on an auto loan?

Accepted Answer

To provide additional creditworthiness when the primary borrower's credit is insufficient

Answer

To receive a copy of all loan statements

Answer

To share ownership of the vehicle title

Answer

To act as the insurance beneficiary on the vehicle

Question 2

Which regulation governs the collection and use of consumer credit information by credit reporting agencies?

Accepted Answer

Fair Credit Reporting Act (FCRA)

Answer

Regulation B

Answer

Truth in Lending Act

Answer

Dodd-Frank Act

Question 3

A balloon payment loan in the context of auto financing means:

Accepted Answer

A large lump-sum payment is due at the end of the loan term

Answer

The interest rate rises at the end of the term

Answer

The customer receives a refund if the car appreciates

Answer

Monthly payments increase incrementally throughout the term

Question 4

Under the Equal Credit Opportunity Act (ECOA), a lender CANNOT deny credit based on which of the following?

Accepted Answer

National origin

Answer

Insufficient income

Answer

Poor payment history

Answer

High existing debt load

Question 5

What does 'front-end profit' refer to in a dealership F&I context?

Accepted Answer

Profit earned from the vehicle sale itself (gross on the car)

Answer

Profit earned from F&I product sales like warranties

Answer

The dealer's factory invoice discount

Answer

The lender's origination fee

Question 6

Which document legally establishes the terms of a consumer auto loan in a dealership sale?

Accepted Answer

Retail Installment Sales Contract (RISC)

Answer

Buyer's Order

Answer

Title Application

Answer

Credit Application