DMV Sales Contracts and Disclosures 5

Question 1

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

Accepted Answer

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

Answer

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

Question 2

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

Accepted Answer

Still disclose the APR and all other credit terms in writing

Answer

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

Question 3

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

Accepted Answer

Transfers the financing obligation while the sale is complete

Answer

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

Question 4

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

Accepted Answer

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

Answer

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

Question 5

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:

Accepted Answer

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

Answer

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

DMV - Representative Exam Practice Test

DMV - Representative Exam Practice Test

DMV Sales Contracts and Disclosures 5