Colorado Car Sales Practice Test

What is required if an advertisement includes a down payment amount?

1. It must disclose the annual percentage rate

2. It must provide the vehicle color

3. It must mention the dealership location

4. It must include the seller's phone number

The correct answer is: It must disclose the annual percentage rate

When an advertisement for a vehicle includes a down payment amount, it is required to disclose the annual percentage rate (APR). This is essential because the down payment is part of the overall financing terms, and consumers must be informed about the cost of borrowing, which is represented by the APR. This requirement aims to ensure transparency in the financing process and helps consumers make informed decisions about their purchases. Failure to include the annual percentage rate when mentioning a down payment can lead to misleading information, as potential buyers may not fully understand the total cost of financing the vehicle without knowing the interest rate they will be subjected to. The inclusion of the APR ensures that consumers are aware of the terms associated with financing, allowing them to compare offers across different dealerships more effectively. The other options listed do not specifically relate to the advertising requirements concerning financing terms. While vehicle color, dealership location, and seller's contact information are important for consumers, they are not mandated disclosures tied directly to the mention of a down payment in an advertisement.