AFIP Vehicle Service Contracts and Aftermarket Products 3

Question 1

Under the FTC's Used Car Rule, what is a dealer required to display on used vehicles offered for sale?

Accepted Answer

A Buyers Guide disclosing warranty coverage or as-is status

Answer

A Monroney sticker showing MSRP and optional equipment

Answer

A CARFAX vehicle history report printed within 30 days

Answer

A state emissions test certificate dated within the current year

Question 2

Which federal law requires dealers to disclose the Annual Percentage Rate (APR) and total finance charge to customers in F&I transactions?

Accepted Answer

The Truth in Lending Act (TILA) / Regulation Z

Answer

The Fair Credit Reporting Act (FCRA)

Answer

The Equal Credit Opportunity Act (ECOA)

Answer

The Gramm-Leach-Bliley Act (GLBA)

Question 3

In F&I compliance, 'payment packing' is best defined as:

Accepted Answer

Quoting a monthly payment that includes undisclosed aftermarket products to inflate the deal

Answer

Bundling multiple financing incentives to lower the customer's payment below the advertised rate

Answer

Adding excessive dealer markup to the vehicle's MSRP before negotiating

Answer

Presenting all F&I products simultaneously rather than one at a time

Question 4

The Equal Credit Opportunity Act (ECOA) as it applies to automotive F&I prohibits:

Accepted Answer

Discriminating against credit applicants based on race, sex, national origin, or other protected classes

Answer

Charging customers a higher interest rate than the buy rate established by the lender

Answer

Financing vehicles for customers with credit scores below a lender-set minimum

Answer

Offering different warranty products to customers based on vehicle age

Question 5

Under the Gramm-Leach-Bliley Act (GLBA), automotive dealers must provide customers with a privacy notice that:

Accepted Answer

Explains what nonpublic personal information is collected and how it may be shared

Answer

Lists every lender to whom the dealer submits credit applications

Answer

Discloses the dealer's markup on all finance and insurance products

Answer

Certifies that the dealer does not sell customer data to third-party marketers

Question 6

What is 'dealer reserve' (also called dealer participation) in the context of F&I financing?

Accepted Answer

The difference between the buy rate offered by the lender and the contract rate charged to the customer

Answer

A pool of funds the dealer sets aside to cover repossession losses

Answer

A fee paid by the manufacturer to the dealer for financing vehicles through captive lenders

Answer

The dealer's portion of GAP insurance premiums retained as profit

Question 7

Which practice best exemplifies AFIP's ethical standard of 'menu selling' in F&I?

Accepted Answer

Offering all available products transparently with total pricing before negotiating payment

Answer

Presenting only the most profitable products first to maximize revenue per deal

Answer

Limiting product offerings based on the customer's perceived income level

Answer

Presenting products only after the customer signs the retail installment contract