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Contract Management Flashcards

7 cards from real CAC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Contract Management flashcards as text

  1. In a dealer portfolio program, what is a dealer 'holdback' or back-end payment generally tied to?

    Answer: Collections on the dealer's pooled contracts after the lender recovers its advance and fees

    Portfolio programs pay dealers additional amounts from pool collections once the advance and servicing fees are recovered.

  2. What is the primary difference between a 'portfolio' and a 'purchase' program in indirect auto financing?

    Answer: Purchase programs pay the dealer a one-time amount, while portfolio programs pay an advance plus potential future collections

    In purchase programs the dealer gets one upfront payment; portfolio programs pay an advance and later back-end amounts.

  3. A buyer's contract shows an amount financed that exceeds the figures on the buyer's order. What should contract management do first?

    Answer: Hold funding and reconcile the discrepancy with the dealer

    Discrepancies between deal documents must be reconciled before funding to ensure accuracy and compliance.

  4. Under the Equal Credit Opportunity Act, which factor may NOT be used to decide whether to purchase a contract?

    Answer: The applicant's national origin

    ECOA prohibits credit discrimination based on national origin, race, color, religion, sex, marital status, age, and public assistance income.

  5. Which item is commonly a funding requirement for a contract that includes a GAP product?

    Answer: A signed GAP addendum showing the price and buyer's voluntary election

    Ancillary products like GAP require a signed addendum showing price and that the purchase was optional.

  6. Why must optional ancillary products be disclosed as voluntary on the contract?

    Answer: Representing them as required can be a deceptive practice and distort the cost of credit

    Presenting optional products as mandatory can violate UDAP/UDAAP rules and affect finance charge disclosure.

  7. What is the typical consequence when a dealer fails to deliver the title with the lender's lien recorded within the required time?

    Answer: The lender may require repurchase or charge back the dealer under the dealer agreement

    Dealer agreements usually include repurchase or chargeback remedies when title and lien perfection obligations are not met.