STUDY GUIDE

Copyrighted © 2013, Dealer License Seminars of San Diego.  

Duplication is Strictly Enforced.

(Great to use to study for DMV exam –  COMMONLY TESTED TOPICS

 

CHAPTER 1:  California Civil Code 2981 Relating to Motor Vehicle Sales Finance

 

The conditional sales contract must be in WRITING

 

Contract cancellation cooling off period is for 2 DAYS

 

Conditional Sales Contract must include all COSTS and TERMS of payment

 

A written disclosure is required for after market ADD ON ITEMS

 

Contract must include signatures of buyer and SELLER

 

Copies must be furnished to BUYER

 

Conditional sales contract required for financing and CASH sales

 

 

CHAPTER 2:  Vehicle History Disclosure Requirements

 

Dealer must disclose any Known DAMAGE

 

ODOMETER replacement must be disclosed

 

Vehicles which were previous rentals or TAXIS  must be disclosed

 

Previous LAW  enforcement vehicles must be disclosed

 

Response to customer INQUIRIES  must be provided

 

 

CHAPTER  3: Motor Vehicle Financing

 

When the dealer is the “bank”, it is more commonly referred to as IN- house financing.   

 

Terms of financing must be disclosed in the Conditional SALES contract.

 

The maximum allowable interest rate is generally 29.9 percent.

 

Computation of interest and conversion to annual percentage rate (apr) and computation of monthly payments is much easier if you use computer SOFTWARE.

 

Cap on finance mark-up rate occurs when a dealer ASSIGNS a contract.

 

CHAPTER 4: Truth in Lending

 

Truth in lending disclosures must appear in the conditional SALES contract

 

Disclosure of a 3-digit CREDIT SCORE  is required under AB 68           

 

Contract not EXECUTED means dealer must obtain a signed contract before delivery.

 

When a buyer defaults, it constitutes a BREACH of the conditional sales contract     

 

When a buyer defaults, the dealer may hire a REPOSSESSION agency.

 

When a buyer negotiates in Spanish, use a Spanish CONDITIONAL SALES CONTRACT

 

Dealer carrying the CONTRACT means the dealer does In-House Financing.      

 

The maximum documentation preparation fee is 55 dollars.

 

 

CHAPTER 5: Sales and Use Tax    

 

It is unlawful to not REPORT sales tax      

 

USE tax is due when a tax-free purchase is not resold.

 

After taxes are collected, you must pay them to the BOARD OF EQUALIZATION

 

Tax is computed based on the county where the buyer LIVES

 

Is the document preparation fee taxable?  (YES OR NO) YES

 

Is the smog certificate fee ($8.25 portion) taxable?  (YES OR NO) NO

 

Dealers must obtain a Board of equalization resale PERMIT

 

 

CHAPTER 6: DIVISION 12 - Relating to Equipment of Vehicles

 

All safety equipment must be in compliance with division 12

 

Division 12 safety equipment cannot be WAIVED

 

It’s OK to sell a car with a burned out headlight if buyer consents (True or False) FALSE

 

If a car is sold AS-IS, it still needs to be SAFE (True or False) TRUE

 

CHAPTER 7:  Advertising   

 

Advertising applies to all MEDIA methods          

 

Disclosure as a DEALER must be in all forms of advertisements

           

Vehicle must be identified by VIN, LICENSE PLATE OR STOCK number     

 

All terms of SALE must be specified

 

The word “Certified” for used vehicles is now regulated by AB68 (True or False) TRUE

 

Illegal use of coupons or simulated CHECKS cannot be misleading.     

 

Withdrawal of vehicle after vehicle is sold must be within 48 hours.

 

Honoring the advertised price when a buyer is unaware of the ADVERTISEMENT is unlawful         

 

           

 

CHAPTER 8: Odometers     

           

Must be in working condition at time of RETAIL SALE.

 

It is illegal to roll back odometers (true or false) TRUE

 

Notification is required when an odometer is REPAIRED OR REPLACED          

 

Odometer disclosure must be made by legal owner of REPOSSESSED vehicle  

 

 

CHAPTER 9: Vehicle Licensing And Registration

           

           

Transfers generally must occur within 30 days.

 

Secure power of ATTORNEY  is located on the REG 262 form.

 

Signature  on documents must match the buyer’s DRIVER LICENSE SIGNATURE

           

Transfer fee costs $15

           

What does A.S.F. stand for? ADMINISTRATIVE SERVICE FEE    

 

Quick titles are available for an extra fee (true or false) TRUE

 

Dealers must refund  excess REGISTRATION fees to buyer.

 

Weight fees are for COMMERCIAL vehicles.

 

What does P.T.I. stand for? PERMANENT TRAILER IDENTIFICATION

 

There are unwinds and there are ROLLBACKS

 

 

CHAPTER 10: Branch Locations    

 

You must apply for a branch location on the form called Application for MODIFICATION

 

A branch location is not required when a vehicle is displayed and no sales are made or DEPOSITS are accepted at the location.

 

Fees required   for a branch location cost $70

 

For a weekend “tent sale”, apply for a TEMPORARY  branch permit.

 

 

 

CHAPTER 11: Unlawful Dealer Activities 

 

Misusing special plates, or permitting their unlawful USE is unlawful.

 

Lending dealer supplies and permitting misuse of license or BOOKS  is unlawful.

 

Selling cars at an unlicensed LOCATION  is unlawful.

           

Failure to pay administrative SERVICE fees      is unlawful.

 

Submission of dishonored CHECK to the department is unlawful

 

Failure to transfer TITLE  is unlawful.

 

Employing unlicensed SALESPERSONS is unlawful.

 

Bait and SWITCH  is unlawful.

 

BIRD dog fees are unlawful.

 

Ab 68 violations are a misdemeanor crime.  (true or false) TRUE

 

 

CHAPTER 12. Air Pollution Control Requirements           

 

Smog test is required prior to a vehicle being OFFERED for sale    

 

There are no smog requirements when vehicle is sold at WHOLESALE           

 

Dealer is allowed to charge retail customers  $58.25 in total smog fees.      

 

Duration of a smog certificate   for dealers while in inventory is 2 years.

 

No smog is required for transfers 4 model years or newer   

 

           

CHAPTER 13: Regulations Of The Bureau Of Automotive Repair         

 

What does B.A.R. stand for? BUREAU OF AUTOMOTIVE REPAIR 

 

A dealer must register with the Bureau of Automotive Repair if the dealer does repair services as a business (true or false) TRUE       

 

The Bureau of Automotive Repair website www.smogcheck.ca.gov

 

 

 

CHAPTER 14: Handling, Completion, And Disposition Of Departmental Forms

 

Report of SALE is required      

 

Security of reports of sale is required (true or false) TRUE

           

The dealer notice must be mailed to the DMV within 5  days.

 

The WINDOW copy of report of sale   is also known as the “temporary permit”.

 

Submission of application copy of the report of sale and other documents to the department must be made within 30 DAYS

           

When ordering report of sales, you must use the appropriate inventory order  POST card

 

 

CHAPTER 15: Basic Licensing Requirements      

 

The DMV website where you can obtain forms is www.dmv.ca.gov

 

Additional documents / permits are required as part of the application package (true or false) TRUE

 

Bond requirements for a retail license are $50,000

 

Required application fee is $150

 

A dealer license is renewed every 2 years.

 

Penalties for late/nonrenewal    are a penalty of $150

 

Name and address change requirements must be done on the Application for MODIFICATION 

 

Sign requirements are to be 2 square feet.

 

If your bond is reduced or expires, there will be an automatic CANCELLATION  of your license.

 

 

CHAPTER 16: Use Of Special Dealer Plates         

 

An owner can use dealer plates for any PURPOSE

 

Salespersons can use dealer plates for BUSINESS  use only.

 

Dealer plates are only to be used on vehicles in your INVENTORY           

 

 

CHAPTER 17: FEDERAL BUYER’S GUIDE       

 

The Buyer’s Guide is a federally MANDATED program  

 

The buyer must sign the Buyer’s Guide (true or false) TRUE

 

Buyer’s Guides must be removed during test drives. (true or false) TRUE

 

 

CHAPTER 18: Stolen Vehicle Prevention  

 

A stolen vehicle will go back to the rightful OWNER

           

Indicia VERIFICATION can be done to have the VIN number checked out.        

 

CHAPTER 19: Dmv Enforcement Actions 

 

Typical actions are Administrative, Criminal       and CIVIL

           

 

CHAPTER 20: Warranties  

 

Dealers must offer 30-day warranties on all vehicles (true or false) FALSE     

 

When a dealer cannot repair a new vehicle in 4 attempts, the  LEMON  law may apply.

 

Service contracts can be sold.  These are commonly referred to as extended WARRANTIES

 

Reserve your seat now!

 

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