Contract Management Flashcards

What is the main purpose of a dealer servicing agreement in an indirect finance relationship?

Answer: To define the terms, obligations, and remedies governing contracts the dealer assigns

The dealer agreement sets assignment terms, representations, fees, and remedies between dealer and finance company.

A buyer disputes information the finance company furnished to a credit bureau. Which law requires a reasonable investigation?

Answer: Fair Credit Reporting Act

The FCRA requires furnishers to investigate disputes and correct inaccurate information.

Which situation would most likely require a contract to be rewritten before funding?

Answer: The disclosed APR on the contract is incorrect

Inaccurate TILA disclosures like the APR typically require a corrected, re-signed contract.

What does 'funding' a contract mean in indirect auto finance?

Answer: The finance company pays the dealer for the assigned contract

Funding is the finance company's payment to the dealer after the contract package passes review.

When a contract includes a cosigner, what disclosure does the FTC Credit Practices Rule require?

Answer: A Notice to Cosigner explaining their liability

The Credit Practices Rule requires a separate notice informing cosigners they may be liable for the full debt.

Which practice helps a finance company maintain contract quality across many dealers?

Answer: Tracking dealer-level performance and funding exceptions over time

Monitoring dealer performance and exception rates identifies risky dealers and improves contract quality.

Under the Servicemembers Civil Relief Act, what may an active-duty borrower request on a contract entered before military service?

Answer: Interest capped at 6% during military service

The SCRA caps interest at 6% on pre-service obligations upon the servicemember's request.