DMV - Representative Sales Contracts and Disclosures Questions and Answers

Question 1

According to the Rees-Levering Automobile Sales Finance Act, which of the following must be explicitly itemized on the face of a conditional sale contract if it is part of the amount being financed?

Accepted Answer

The amount paid to a public official for license and registration fees.

Answer

The dealer's profit margin on the vehicle.

Answer

The cost of future scheduled maintenance.

Answer

The salesperson's commission.

Question 2

A dealership sells a 7-year-old used vehicle "as-is" and provides all the necessary sales contract disclosures. However, the federally required Used Car Buyer's Guide was kept in the glove compartment and only shown to the customer after the contract was signed. Which statement is true regarding this situation?

Accepted Answer

The dealer violated federal law by not prominently displaying the Buyer's Guide on the vehicle before the sale.

Answer

This is permissible as long as the buyer receives the guide before leaving the lot.

Answer

The "as-is" sale is automatically voided and becomes a full warranty sale.

Answer

This is only a violation if the vehicle is less than 5 years old.

Question 3

When a customer trades in a vehicle with negative equity (owing more than it's worth), how must this be handled on the retail installment sale contract in California?

Accepted Answer

It must be clearly and conspicuously disclosed as a separate line item.

Answer

It should be added to the cash price of the new vehicle without separate disclosure.

Answer

The dealer can absorb the cost into the overall financing without itemizing it.

Answer

It is illegal to proceed with a sale if the trade-in has negative equity.

Question 4

A licensed dealer is processing the sale of several vehicles. For which of the following vehicle transfers is an odometer disclosure statement NOT required?

Accepted Answer

The sale of a commercial truck with a Gross Vehicle Weight Rating (GVWR) of 18,000 lbs.

Answer

The sale of an 8-year-old passenger sedan.

Answer

The transfer of a 2-year-old light-duty truck to another dealer.

Answer

The sale of a new vehicle from a dealer to the first retail buyer.

Question 5

A customer is purchasing a used vehicle from a licensed California dealer and asks about the optional 2-day contract cancellation agreement. In which of the following scenarios is the dealer prohibited from offering this option?

Accepted Answer

The customer is purchasing a used sports car with a negotiated price of $45,000.

Answer

The customer is buying a 3-year-old sedan with a purchase price of $25,000.

Answer

The customer is financing the entire purchase through a credit union.

Answer

The customer is trading in a vehicle as part of the transaction.

Question 6

When a licensed dealer sells a vehicle on consignment for a private party, which of the following is a specific disclosure requirement to the purchaser?

Accepted Answer

The dealer must disclose in writing to the purchaser that the vehicle is being sold on consignment.

Answer

The dealer must provide the purchaser with the consignor's home address and phone number.

Answer

The final sale price must be personally approved by the consignor in the buyer's presence.

Answer

The dealer must disclose the exact commission percentage they are earning from the consignor.