AFIP Credit and Lending Products Flashcards
6 cards from real AFIP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 AFIP Credit and Lending Products flashcards as text
What is 'payment packing' in F&I, and why is it prohibited?
Answer: Bundling multiple finance products into one payment without disclosure, a deceptive practice
Payment packing is the deceptive practice of inflating the monthly payment quote to include undisclosed products, violating consumer protection laws.
The term 'money factor' in an auto lease is most directly related to which loan concept?
Answer: Interest rate (APR)
Money factor is the lease equivalent of an interest rate; multiplying it by 2,400 converts it to an approximate APR.
A customer's debt-to-income (DTI) ratio is calculated by dividing:
Answer: Monthly debt payments by gross monthly income
DTI is total monthly debt obligations divided by gross monthly income, and lenders use it to assess repayment capacity.
What is the 'reserve cap' concept in dealership lending?
Answer: The maximum dealer markup above the lender's buy rate allowed by lender policy
A reserve cap limits how much a dealer can mark up the interest rate above the lender's buy rate, reducing fair lending risk and regulatory exposure.
Which federal agency has primary supervisory authority over auto lenders for fair lending compliance?
Answer: Consumer Financial Protection Bureau (CFPB)
The CFPB has supervisory and enforcement authority over large auto lenders and nonbank finance companies for fair lending under ECOA and the FCRA.
In auto financing, what is 'negative equity' (being 'upside-down')?
Answer: When the loan balance exceeds the current market value of the vehicle
Negative equity occurs when a borrower owes more on the loan than the vehicle is worth, often resulting from rapid depreciation or minimal down payment.