Colorado Car Sales Practice Test

Which of the following is TRUE about the advertisement of terms that require additional disclosures?

1. It is optional to disclose down payment amounts

2. Specific triggering terms must comply with disclosure requirements

3. Down payment details can be avoided in advertisements

4. Only basic information is required for advertisements

The correct answer is: Specific triggering terms must comply with disclosure requirements

The assertion that specific triggering terms must comply with disclosure requirements is accurate because the Truth in Lending Act (TILA) mandates that when certain terms are included in an advertisement, clear and conspicuous disclosures must follow. Triggering terms include specific references to financing, such as the amount of the down payment or the terms of repayment. These regulations ensure that consumers are not misled and are fully informed about the financial implications of a vehicle purchase. For example, if an advertisement mentions a specific down payment amount, the seller must also disclose other important details, such as the annual percentage rate, the number of payments, and the total cost of the credit. This is designed to give potential buyers a clear picture of the financing terms. The other choices do not hold true within the context of these regulations. The option suggesting that disclosing down payment amounts is optional misrepresents the requirement under TILA, which emphasizes consistent disclosure for all triggering terms. Additionally, the options that imply down payment details can be avoided or that only basic information is required ultimately undermine the intention of consumer protection laws, which aim to ensure transparency and informed decision-making in financial agreements.