Vehicle Service Contracts and Aftermarket Products Flashcards
7 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 7 Vehicle Service Contracts and Aftermarket Products flashcards as text
Under the FTC's Used Car Rule, what is a dealer required to display on used vehicles offered for sale?
Answer: A Buyers Guide disclosing warranty coverage or as-is status
The FTC Used Car Rule requires dealers to display a Buyers Guide on every used vehicle, clearly stating whether the vehicle is sold 'as is,' with a dealer warranty, or with a remaining manufacturer warranty.
Which federal law requires dealers to disclose the Annual Percentage Rate (APR) and total finance charge to customers in F&I transactions?
Answer: The Truth in Lending Act (TILA) / Regulation Z
The Truth in Lending Act, implemented through Regulation Z, requires dealers and lenders to clearly disclose the APR, total finance charge, and all credit terms before consummating a retail installment contract.
In F&I compliance, 'payment packing' is best defined as:
Answer: Quoting a monthly payment that includes undisclosed aftermarket products to inflate the deal
Payment packing is an illegal practice where F&I managers inflate the monthly payment quote by embedding undisclosed products, deceiving customers into purchasing items they did not knowingly agree to.
The Equal Credit Opportunity Act (ECOA) as it applies to automotive F&I prohibits:
Answer: Discriminating against credit applicants based on race, sex, national origin, or other protected classes
ECOA prohibits creditors, including dealers acting as credit intermediaries, from discriminating against applicants in any aspect of a credit transaction based on protected characteristics.
Under the Gramm-Leach-Bliley Act (GLBA), automotive dealers must provide customers with a privacy notice that:
Answer: Explains what nonpublic personal information is collected and how it may be shared
GLBA requires financial institutions, including dealers engaged in financial activities, to provide customers a privacy notice explaining their data collection practices and customers' opt-out rights regarding information sharing.
What is 'dealer reserve' (also called dealer participation) in the context of F&I financing?
Answer: The difference between the buy rate offered by the lender and the contract rate charged to the customer
Dealer reserve is the compensation a dealer earns by marking up the lender's buy rate; the dealer charges the customer a higher rate and receives a portion of the resulting finance charge from the lender.
Which practice best exemplifies AFIP's ethical standard of 'menu selling' in F&I?
Answer: Offering all available products transparently with total pricing before negotiating payment
AFIP's menu selling standard requires presenting all available F&I products with their full costs upfront, ensuring every customer has equal access to information and the opportunity to make an informed decision.