Michigan Collections Manager License Practice Test

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Prepare for the Michigan Collections Manager License Test with flashcards and multiple choice questions. Each question is equipped with hints and detailed explanations to enhance your understanding and readiness.

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What is the maximum doc prep fee in an installment sales contract?

$160 or 5% of price
$100 or 10% of price
$200 or 7% of price
$150 or 3% of price

The correct answer is: $160 or 5% of price

The maximum document preparation fee in an installment sales contract is defined by Michigan law, which stipulates that this fee can be either a flat amount or a percentage of the contract price, whichever is lower. According to the guidelines, the maximum allowable fee is $160 or 5% of the total price of the sale. When determining the fee in a real installment sales scenario, it's important to ensure that the lesser amount between the flat fee and the percentage is applied, maintaining compliance with legal standards. This ensures that consumers are not overcharged and have better clarity regarding the terms of their installment contracts. Understanding these regulations is critical for collections managers to ensure they adhere to legal practices while handling installment contracts, thus avoiding potential legal issues or disputes with consumers.