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Study Guide - Truth in Lending

  1. In financing a vehicle on an installment sales contract, the APR stands for
    1. Annual periodic rate.
    2. Annual percentage rate.
    3. Actual percentage rate.
    4. The Federal Trade Commission identifies APR as annual percentage rate.
  2. Finance charges must be stated in
    1. Simple interest rate.
    2. Compound interest rate.
    3. Annual percentage rate.
    4. When stating the finance charges, you must use annual percentage rate.
  3. Full disclosure of credit terms must be made
    1. On the buyers order.
    2. Whenever information is discussed.
    3. Before a sale is consummated.
    4. You must make full disclosure of credit terms to a customer before the sale is final.
  4. Which of the following is required to be disclosed under Regulation Z (Truth in Lending) of the Consumer Credit Protection Act
    1. Amount financed.
    2. Late fees and APR.
    3. Schedule of payments.
    4. All of the above.
    5. Regulation Z requires you to let your customer know the amount they have financed, if there are any late fees, the APR and the schedule of payments.
  5. If a financing company denies a loan application, it must
    1. Provide the applicant with a written statement explaining the reason of denial within 30 days.
    2. Notify the dealership and no one else.
    3. Notify the local credit bureau within 45 days.
    4. Call the applicant and explain why his/her loan was denied.
    5. Customers who are denied financing will be notified by the company, in writing, within 30 days.
  6. When can an inquiry be made of a credit-reporting bureau?
    1. When the customer signs a credit application.
    2. While the customer is on a test drive.
    3. Upon securing a copy of the customer's drivers license.
    4. In an attempt to prequalify the customer.
    5. Customers give dealers the authority to check their credit when they sign a credit application.
  7. Under the Truth In Lending Act, when financing an automobile, which of the following charges have to be disclosed to the customer
    1. Annual percentage rate.
    2. Cost of credit insurance.
    3. Price of extended warranty.
    4. Cost of dealer preparation.
    5. When a dealer assists a customer with the financing of an automobile, the annual percentage rate must be disclosed.
  8. Under the Truth In Lending Act, which of the following will have to be disclosed to the customer
    1. Total number of payments.
    2. Late payment penalty.
    3. Annual percentage rate.
    4. All of the above must be disclosed.
    5. The Truth In Lending Act requires a dealer to provide the customer with the total number of payments, any late payment penalty and the annual percentage rate.
  9. When discussing a customer's loan application, which of the following cannot be asked
    1. Are you married?
    2. Is this a joint application?
    3. Have you ever filed for bankruptcy?
    4. All of the above.
    5. You cannot ask questions such as "Are you married", when discussing the customer loan application.

Section 5 of Study Guide

Section 3 of Study Guide