CAC Contract Management 2

Question 1

In indirect auto financing, what typically happens to a retail installment contract after the dealer and consumer sign it?

Accepted Answer

The dealer assigns it to a finance company that purchases it

Answer

The dealer is the original creditor and assigns the retail installment contract to a finance company or bank that buys it.

Question 2

Under the Truth in Lending Act, which disclosure must appear on a consumer retail installment contract?

Accepted Answer

The Annual Percentage Rate (APR)

Answer

TILA and Regulation Z require disclosure of the APR, finance charge, amount financed, and total of payments.

Question 3

A contract is returned to the dealer because the buyer's signature is missing on the arbitration clause. What is this commonly called?

Accepted Answer

A contract stip or funding exception

Answer

Missing signatures or documents create funding exceptions that must be cured before the contract is funded.

Question 4

Which party bears the legal obligation to repay the amount financed on an assigned retail installment contract?

Accepted Answer

The consumer buyer

Answer

Assignment transfers the creditor's rights, but the buyer remains the obligor on the debt.

Question 5

What does the FTC Holder Rule require in consumer credit contracts arising from a sale?

Accepted Answer

A notice preserving the buyer's claims and defenses against any holder of the contract

Answer

The Holder Rule notice lets consumers assert seller-related claims and defenses against the assignee holding the contract.

CAC - Certified Acceptance Corporation Professional Practice Test