AFIP Vehicle Service Contracts and Aftermarket Products 2

Question 1

What is the primary purpose of GAP (Guaranteed Asset Protection) coverage in automotive F&I?

Accepted Answer

To cover the difference between the vehicle's ACV and the outstanding loan balance if the vehicle is totaled

Answer

To protect the vehicle against physical damage from accidents

Answer

To guarantee the customer a trade-in value equal to their loan payoff

Answer

To provide liability coverage if the customer is at fault in an accident

Question 2

Which of the following scenarios would GAP coverage most directly address?

Accepted Answer

A customer's vehicle is stolen and their primary insurance pays less than the loan balance

Answer

A customer needs a rental car while their vehicle is being repaired

Answer

A customer's engine fails outside of warranty and they cannot afford the repair

Answer

A customer wants to lower their monthly payment by extending the loan term

Question 3

Credit life insurance offered through an F&I department is primarily designed to:

Accepted Answer

Pay off the outstanding loan balance if the primary borrower dies

Answer

Cover the vehicle loan payments if the borrower becomes temporarily unemployed

Answer

Provide life insurance for all family members of the vehicle purchaser

Answer

Insure the dealer against default by the customer

Question 4

What distinguishes Credit Disability Insurance from Credit Life Insurance in F&I?

Accepted Answer

Credit disability makes loan payments if the borrower becomes disabled; credit life pays off the balance upon death

Answer

Credit disability covers total loss of the vehicle; credit life covers theft

Answer

Credit disability is mandatory under federal law; credit life is optional

Answer

Credit disability applies only to lease agreements; credit life applies only to purchases

Question 5

A Tire and Wheel Protection plan in automotive F&I typically covers:

Accepted Answer

Damage to tires and wheels caused by road hazards such as potholes and nails

Answer

Normal tread wear and scheduled tire rotations

Answer

Replacement of all four tires when one is damaged beyond repair

Answer

Damage caused by improper inflation or misalignment

Question 6

Paintless Dent Repair (PDR) coverage as an aftermarket F&I product is best described as:

Accepted Answer

A service contract covering minor dents and dings without repainting

Answer

Coverage for full repaints after a major accident claim

Answer

Insurance against key scratches and vandalism damage

Answer

A warranty on factory paint defects for the life of the vehicle

Question 7

When presenting aftermarket F&I products, AFIP standards require that pricing be disclosed in which manner?

Accepted Answer

The total price of each product must be disclosed separately and clearly

Answer

Only the monthly payment impact needs to be communicated, not the total product price

Answer

Products may be bundled together with one total price as long as it is itemized on the contract

Answer

Pricing disclosure is optional if the customer signs a general acknowledgment form