Colorado Car Sales Practice Test

Which of the following is true regarding advertising closed-end credit sales of vehicles?

1. The finance charge is mandatory to disclose

2. The total cost of the vehicle must always be included

3. Disclosures must be made verbally only

4. Selling price information can be omitted

The correct answer is: The finance charge is mandatory to disclose

The correct statement regarding advertising closed-end credit sales of vehicles is that the finance charge is mandatory to disclose. This requirement is rooted in consumer protection regulations designed to ensure that potential buyers have access to clear and complete information regarding the cost of financing a vehicle. By mandating the disclosure of the finance charge, sellers help consumers understand the total cost of borrowing, including interest fees, which is crucial for making informed purchasing decisions. Disclosing the finance charge provides transparency and allows consumers to compare offers from different dealerships or lenders more effectively. Inappropriate advertising practices that fail to disclose this essential information could lead consumers to unfavorable financial situations, which is why regulations are tightly enforced in this area. Other options, while they touch on important elements of advertising practices, do not align with the necessary legal requirements for closed-end credit advertising. For instance, there are specific guidelines about what information must be made available and how it should be presented, including written disclosures rather than solely verbal ones. Furthermore, it’s essential to include the selling price in advertisements for credit sales to give a complete picture, while other information cannot be omitted as it would potentially mislead consumers.