DMV Sales Contracts and Disclosures 4

Question 1

A buyer purchases a used vehicle and later discovers it was previously declared a total loss by an insurer. The dealer did not disclose this. The buyer's strongest legal claim is likely based on:

Accepted Answer

Failure to disclose a material fact

Answer

Total loss history is a material fact that must be disclosed; failure to do so supports a claim of fraudulent concealment or unfair trade practice.

Question 2

Under the Truth in Lending Act (TILA), the Annual Percentage Rate (APR) must be disclosed:

Accepted Answer

Before the credit contract is signed

Answer

TILA requires clear disclosure of the APR and other credit terms before the consumer signs a credit agreement.

Question 3

A dealer sells a vehicle and the parties agree the purchase price includes a trade-in allowance. If the trade-in value is later adjusted downward without the buyer's consent, this could be:

Accepted Answer

A breach of the purchase agreement

Answer

Once a trade-in value is agreed upon in a signed contract, unilaterally reducing it without consent constitutes a breach of that agreement.

Question 4

A 'four-square' worksheet is used by some dealers to negotiate. Regulators view it skeptically because it can:

Accepted Answer

Obscure the true cost by manipulating four variables simultaneously

Answer

The four-square method can confuse buyers by shifting focus between price, trade-in, down payment, and monthly payment to obscure actual cost.

Question 5

Which of the following is NOT typically required to appear on a vehicle purchase contract?

Accepted Answer

Dealer's profit margin

Answer

Dealers are not required to disclose their profit margin on the purchase contract; VIN, selling price, and finance charges are required disclosures.

DMV - Representative Exam Practice Test

DMV - Representative Exam Practice Test

DMV Sales Contracts and Disclosures 4