Contract Management Flashcards

What is a 'chargeback' in the context of dealer contract agreements?

Answer: Recovery of a previously paid amount from the dealer due to early payoff, cancellation, or a breach

Chargebacks recoup amounts paid to the dealer when contracts cancel, pay early, or violate representations.

Which representation does a dealer typically make when assigning a contract to a finance company?

Answer: The contract is genuine, enforceable, and complies with applicable law

Dealers warrant the contract's validity, enforceability, and legal compliance, not the buyer's future performance.

If a buyer pays off a simple-interest contract early, how is interest generally handled?

Answer: Interest is charged only on the principal outstanding for the days it was outstanding

Simple-interest contracts accrue interest daily on the outstanding balance, so early payoff reduces total interest.

Which federal law governs the privacy notices a finance company must give consumers regarding their nonpublic personal information?

Answer: Gramm-Leach-Bliley Act

The GLBA requires financial institutions to provide privacy notices and safeguard consumer information.

A contract package arrives with a credit application signed by someone other than the buyer listed on the contract. What is the best action?

Answer: Flag possible fraud and hold funding pending investigation

Mismatched identities are a classic fraud red flag requiring investigation before funding.

Under Regulation Z, what is the 'amount financed'?

Answer: The amount of credit provided to or on behalf of the consumer

The amount financed is the credit extended to or on behalf of the buyer, excluding prepaid finance charges.

Why do finance companies use standardized contract forms approved for each state?

Answer: State laws differ on disclosures, rate caps, and required terms

State-specific forms help ensure compliance with varying state retail installment sales laws.