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CAR DEALER LICENSE TEST
WITH CORRECT ANSWERS
Question 1: The National Motor Vehicle Title Information System requires which of the following?
- All warranty agreements be sent to DMV
- All vehicles have a Car Fax
- A red warning decal be placed on vehicles with branded titles
- Both A and B
Correct Answer: C. A red warning decal be placed on vehicles with branded titles
Question 2: When a dealer sells a vehicle that was consigned to them to sell, they must:
- Provide the seller an accounting and payment within 20 days of the sale
- Test drive it before agreeing to sell it
- Provide a warranty
- None of the above
Correct Answer: A. Provide the seller an accounting and payment within 20 days of the sale
Question 3: Which of the following are permitted methods for computing interest rate?
- The Pre-Computed Basis Method
- The Simple Interest Basis Method
- The Friedman Method
- Both A and B
Correct Answer: D. Both A and B
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Question 4: What is the maximum a dealer may charge a customer for a smog test?
A. $35.00
B. $50.00
C. $65.00
D. $100.00
Correct Answer: B. $50.00
Question 5: What is the basic DMV transfer fee to transfer the title into the buyer's name?
A. $10.00
B. $15.00
C. $25.00
D. $50.00
Correct Answer: B. $15.00
Question 6: If the buyer defaults on a Conditional Sales Contract, the dealer may, subject to proper
notification to the buyer:
- Accelerate the amount due
- Repossess vehicle
- Sell the vehicle
- All of the above
Correct Answer: D. All of the above
Question 7: Which of the following are taxable in a vehicle sales transaction?
- Document preparation fee
- $50 smog fee paid to seller/dealer
- Both A and B
- Insurance fees
Correct Answer: C. Both A and B
Question 8: Which of the following are not taxable in a vehicle sales transaction?
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- Finance charges
- Insurance charges
- Smog certificate fee (paid to state)
- All of the above
Correct Answer: D. All of the above
Question 9: Buy Here Pay Here (self-financing) Dealers must:
- Charge interest rates that are less than 20?ove prime rate
- Offer 30 day, or 1,000 mile warranties, and put FMV notices on their vehicles
- Send 50% of all interest charged to DMV
- Finance all vehicles sold for more than $50,000
Correct Answer: B. Offer a 30 day, or 1,000 mile warranties, and put FMV notices on their vehicles
Question 10: Which of the following is required Safety Equipment item?
- Padded dashboards
- Smog Equipment
- Door locks
- Reclining seatbacks
Correct Answer: B. Smog Equipment
Question 11: Advertisements must identify the dealer by which of the following?
- Phone number
- The dealership name
- "dlr"
- "Dealer"
Correct Answer: B. The dealership name
Question 12: If a vehicle has been sold, any advertising on that vehicle must be withdrawn within how long?
- 24 hours
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- 48 hours
- 72 hours
- 5 days
Correct Answer: B. 48 hours
Question 13: If a dealer buys a vehicle with an odometer that is not working the dealer must:
- Tell the buyer that the odometer is broken
- Repair the odometer before selling the vehicle
- Sign a declaration the odometer is not operating to be filed with the DMV
- Do nothing
Correct Answer: B. Repair the odometer before selling the vehicle
Question 14: Where the dealer repairs an odometer, and the odometer is incapable of registering the same
mileage as before service, the dealer must:
- Set the odometer to zero
- Attach a written notice to the left doorframe specifying the previous mileage and date of repair
- Estimate mileage and set the odometer to the mileage
- Both A and B
Correct Answer: D. Both A and B
Question 15: Is it ever legal for a dealer to reset, or "roll back" an odometer to show less than the actual mileage?
- Yes, with explicit DMV permission
- Yes, if the engine is completely replaced
- No, under any circumstances
- Yes, if the customer agrees in writing
Correct Answer: C. No, under any circumstances
Question 16: DMV requires Special Plates (dealer plates) be placed where on the vehicle?
- In the front windshield
- In the rear, over the existing license plate
