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 Rees-Levering Act requires a clear, written itemization of the amount financed. This includes, but is not limited to, the cost of insurance and amounts paid to public officials for fees like vehicle license, registration, and transfer fees. Dealer profit, future maintenance, and salesperson commission are not required to be itemized in this section of the contract.

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

The Federal Trade Commission's (FTC) Used Car Rule mandates that the Buyer's Guide be conspicuously displayed on the vehicle *before* it is offered for sale. Keeping it in the glove compartment does not meet this legal requirement, as it is not in plain view.

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

California law requires that any negative equity on a trade-in vehicle be disclosed separately and transparently on the sales contract. It cannot be concealed by adjusting the vehicle's price or the trade-in allowance. This ensures the buyer understands the total amount being financed.

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

Federal and state laws exempt certain vehicles from the odometer disclosure requirement upon transfer of ownership. A primary exemption is for vehicles with a Gross Vehicle Weight Rating (GVWR) of more than 16,000 pounds. Most used passenger vehicles and new vehicles being sold for the first time require the disclosure.

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

Under the California Car Buyer's Bill of Rights, the optional contract cancellation agreement can only be offered on used vehicles with a purchase price of less than $40,000. Since the sports car's price is $45,000, it is not eligible for the option.

DMV - Representative Exam Practice Test

DMV - Representative Exam Practice Test

DMV - Representative Sales Contracts and Disclosures Questions and Answers