Sales Contracts and Disclosures Flashcards

A vehicle's title shows a 'salvage' brand. Before selling, the dealer must:

Answer: Disclose the salvage brand to the buyer in writing before the sale

Dealers must disclose a salvage brand to the prospective buyer in writing; the branded title alone is insufficient without explicit pre-sale disclosure.

A dealer offers 0% APR financing. Under TILA, the dealer must:

Answer: Still disclose the APR and all other credit terms in writing

TILA requires full written disclosure of all credit terms—including a 0% APR—before the consumer signs any credit agreement.

When a dealer assigns a retail installment sales contract to a bank or finance company, the dealer typically:

Answer: Transfers the financing obligation while the sale is complete

Assignment of a RISC transfers the financing obligation to the assignee (bank/finance company), who then collects payments and bears default risk.

An elderly customer agrees to purchase a vehicle but appears confused about the contract terms. The salesperson should:

Answer: Ensure the customer understands all terms, offer time to review, and suggest bringing an advisor

Dealers must ensure customers understand what they are signing; failing to do so with a vulnerable buyer can constitute an unfair or deceptive practice.

A dealer advertises a vehicle at $19,999 but adds a mandatory $1,500 'market adjustment' at the time of sale. This practice may violate:

Answer: FTC advertising rules requiring that advertised prices be the actual selling price

Advertising a price that does not reflect what the buyer must actually pay is a deceptive advertising practice under FTC guidelines.

A buyer rescinds a vehicle purchase within the right of rescission window provided by state law. The dealer must:

Answer: Return all payments and the trade-in vehicle (or its value) to the buyer

When a valid rescission is exercised, the transaction is unwound: the dealer must return all consideration received, including payments and trade-in.

A dealer issues a 'we owe' slip promising to install floor mats after the sale. Legally, a 'we owe' document is:

Answer: An addendum that creates a binding obligation on the dealer

A 'we owe' slip is a written dealer promise that constitutes a binding contractual addendum to the purchase agreement.