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 must be specified in an installment sales contract regarding the amount due from the buyer?

Cost of warranty
Amount of down payment
Financed amount
Payment amounts

The correct answer is: Amount of down payment

In an installment sales contract, specifying the amount of the down payment is crucial because it establishes the initial payment the buyer is required to make before proceeding with the balance of the transaction. The down payment impacts the overall financing arrangement, as it directly influences the total amount that will need to be financed and the subsequent payment structure. By detailing the down payment, the contract ensures transparency between both parties, providing clarity on the buyer's immediate financial obligation and contributing to the overall understanding of the financing terms. While other factors like the financed amount, payment amounts, and any associated warranties may also be important in the context of the contract, the down payment serves as a fundamental element in defining the buyer's commitment and the seller's confidence in the transaction's feasibility.