California Dealer & Finance Regulations – Review Quiz (Sections 1-4)

32 question-and-answer flashcards covering California contract-cancellation rules, disclosures, financing limits, restocking fees, repossession procedures, and related dealer compliance topics.

Must a California conditional sales contract be in writing? (y/n)

Yes

What are the minimum required dimensions of the contract-cancellation display at each sales office or cubicle?

8 inches by 10 inches

Maximum price a dealer may charge for a contract-cancellation option on a vehicle sold for $5,000 or less?

$75

Maximum price a dealer may charge for a contract-cancellation option on a vehicle sold for exactly $10,000?

$150

Maximum price a dealer may charge for a contract-cancellation option on a vehicle sold for exactly $30,000?

$250

Maximum price a dealer may charge for a contract-cancellation option on a vehicle priced between $30,000 and $39,999?

1 % of the selling price

If a vehicle sells for $40,001, how much may the dealer charge for a contract-cancellation option?

Nothing – the sale is not eligible for the option

What does federal Regulation Z require dealers to do?

Disclose all terms and costs of financing to the buyer

Is a conditional sales contract valid if only the buyer signs? (y/n)

No

True or False: Copies of the conditional sales contract do not have to be given to the buyer after the sale.

False

If a buyer pays cash for a vehicle, must the dealer complete a conditional sales contract? (y/n)

No

What is the maximum deposit an auto broker may accept from a customer?

$1,000

Define vehicle consignment in the context of a dealership.

An arrangement in which a dealer takes possession of a vehicle from its owner for the purpose of selling it

To which agency should a dealer report unlicensed ‘curbing’ activity?

The DMV

Maximum restocking fee when a vehicle under $5,000 is returned under a contract-cancellation option?

$175

Maximum restocking fee when a vehicle under $10,000 is returned under a contract-cancellation option?

$350

Maximum restocking fee when a vehicle costing $10,000–$39,999 is returned under a contract-cancellation option?

$500

Under AB 68, how many times must a dealer allow a vehicle to be returned under a contract-cancellation option within 30 days?

One time

When a vehicle is returned under a valid cancellation option, what must the dealer give back?

Both the buyer’s trade-in and a full refund

True or False: Failing to disclose known material damage to a vehicle exposes a dealer to significant liability.

True

True or False: Former taxicabs, rental cars, and law-enforcement vehicles do not have to be disclosed to buyers.

False

Allowable interest-rate limits for auto-finance companies and buy-here-pay-here dealerships?

No statutory limit applies

Name the two permissible methods for computing finance charges on vehicle loans.

Pre-computed interest and simple interest

AB 68 caps dealer finance income at what percent on contracts of 60 months or less?

2.5 %

AB 68 caps dealer finance income at what percent on contracts longer than 60 months?

2.0 %

What is the maximum document-preparation fee a dealer may charge?

$55

If a dealer obtains a customer’s credit score, must it be disclosed with the required notice? (y/n)

Yes

True or False: If a customer backs out before signing a conditional sales contract, the dealer may keep any payments made.

False

Put the five basic repossession steps in correct order.

Send 15-day certified notice ➔ accelerate balance ➔ repossess vehicle ➔ sell vehicle ➔ sue for any deficiency

In vehicle finance, what is a ‘deficiency’?

The amount the buyer still owes (loss) after the repossessed vehicle is sold

True or False: Only the legal owner or a licensed repossession company may repossess vehicles.

True

True or False: If negotiations occur in Spanish, Chinese, Korean, Tagalog, or Vietnamese, a contract in that language must be provided.

True

A buy-here-pay-here dealer that carries its own contracts must comply with which rules? (Select all that apply.)

Reg Z (Truth-in-Lending), the Vehicle Code provisions, and the Civil Code sections on conditional sales contracts