Mar. 13, 2023
By Michael G. Charapp
Charapp & Weiss LLP
We get many calls seeking advice. Sometimes, the answer requires significant research. Other times, the answer is obvious. Occasionally, we get questions on issues we thought were long settled, suggesting that sometimes we should test whether the memories of our readers should be refreshed. Here is a refresher quiz for 2023. The answers are here.
- When a subprime lender charges a lending fee we wish to pass to the vehicle buyer, we may only do so if we (choose one answer):
- Show it as an addition to vehicle price;
- Show it on the RISC as an amount paid to others;
- Either a or b; or
- Neither a nor b.
- The customer has $11,000 cash to use as a down payment for a vehicle. We do not want to report the receipt of cash. We may advise the customer to deposit the cash in a checking account and write us a check, as long as it is an account in the name of the customer so the IRS can track the cash. True or False?
- Our customer owes more on the trade vehicle than it is worth, what is known in the industry as being “upside down”. We are concerned that the negative equity in the trade vehicle will lead to difficulties in getting the customer’s financing approved at a rate he will find acceptable. The trade is not in good condition, so there is room to increase its value within the range of values for the trade vehicle under the price guide we use. We can cover the increase in price of the trade vehicle by increasing the price of the vehicle the customer is buying. True or False?
- We have a car we took in trade. It has been in a serious accident, but the body work is very good. The only way to see evidence of an accident is from the unibody damage apparent on the undercarriage. We do not intend to disclose this damage, but instead we plan to sell this used car on an “as is” basis. That should protect us against a lawsuit if the buyer discovers the previous damage. True or False?
- We are running an internet only special on a new vehicle at an unusually low price to compete against a neighboring dealer. If a customer comes in to purchase the vehicle, we need not provide that price unless the customer specifically mentions the internet special price. True or False?
- Our customer is buying a used vehicle five model years old and financing it for sixty months. We are concerned that he will go into default rather than fix a serious problem if it should arise within the finance period. We want the customer to buy an extended service agreement to protect against that problem. We may only require one if: (choose one answer):
- The vehicle is six model years old or older;
- The financing is for a minimum of forty eight months;
- a and b; or
- neither a nor b.
- Because of strong feelings about national immigration policy, when it comes time to complete the I-9 we take special care. We complete the entire I-9 for an employee to get it right. We also demand as much information about the applicant’s right to work as we can get. That is the best way to protect our company. True or False?
- When we take a promissory note for a down payment, we can charge interest (choose one answer).
- That is allowed as long as the interest rate does not exceed the interest rate for the transaction as shown on the RISC;
- We should not charge interest;
- We should not take a promissory note for a down payment; or
- None of the above.
- We do not store credit authorizations. We only access a customer’s credit report to determine if he is she is credit worthy. The law does not require that we have signed permission to access a customer’s credit report. It only requires that we have a permissible purpose under the law. True or False?
- We keep signed credit authorizations for the time required by law. That is (choose one answer):
- Two years for completed transactions, and we need not keep authorizations on deals not completed (“dead deals”);
- Two years for completed transactions and two years for dead deals;
- Five years for completed transactions and two years for dead deals; or
- Five years for completed transactions and five years for dead deals.
- I returned from a 20-Group meeting, and a dealer in another state is doing well charging a $395 record-keeping fee in addition to the doc fee permitted by the law of the state in which he does business. That is a good idea. True or False?