AFIP AFIP Credit and Lending Products 3

Question 1

What is 'payment packing' in F&I, and why is it prohibited?

Accepted Answer

Bundling multiple finance products into one payment without disclosure, a deceptive practice

Answer

Adding accessories to a vehicle to increase the sale price legitimately

Answer

Offering extended loan terms to lower the monthly payment with full disclosure

Answer

Calculating payments on the buy rate rather than the contract rate

Question 2

The term 'money factor' in an auto lease is most directly related to which loan concept?

Accepted Answer

Interest rate (APR)

Answer

Loan-to-value ratio

Answer

Down payment percentage

Answer

Credit tier qualification

Question 3

A customer's debt-to-income (DTI) ratio is calculated by dividing:

Accepted Answer

Monthly debt payments by gross monthly income

Answer

Total assets by total liabilities

Answer

Annual income by total loan amount

Answer

Net monthly income by monthly housing payment

Question 4

What is the 'reserve cap' concept in dealership lending?

Accepted Answer

The maximum dealer markup above the lender's buy rate allowed by lender policy

Answer

The maximum amount a customer can borrow

Answer

The minimum credit score required to qualify

Answer

The cap on the vehicle's residual value in a lease

Question 5

Which federal agency has primary supervisory authority over auto lenders for fair lending compliance?

Accepted Answer

Consumer Financial Protection Bureau (CFPB)

Answer

Federal Trade Commission (FTC)

Answer

Office of the Comptroller of the Currency (OCC)

Answer

Securities and Exchange Commission (SEC)

Question 6

In auto financing, what is 'negative equity' (being 'upside-down')?

Accepted Answer

When the loan balance exceeds the current market value of the vehicle

Answer

When the interest rate exceeds the vehicle's depreciation rate

Answer

When the customer's credit score falls after loan origination

Answer

When the dealer's reserve is less than the origination fee