You may enjoy looking for a vehicle. Even if it’s used, it’s new to you. Choosing the make and model, the options and the color all make the buying experience enjoyable. Then, unless you can walk into a dealership and pay cash or already have financing arranged with a lender, you will end up “negotiating” with the salesperson and the finance manager.
Buying a new or used vehicle may be one of the last places where bargaining and negotiating are part of the experience. Auto dealerships know this, so they do what they can to get as much money as they can out of you. To that end, the finance manager may engage in some “payment packing,” which could end up costing you more per month than necessary.
What is payment packing?
The finance manager inflates that first estimate of the monthly payment for the vehicle you want through one or more of the following factors that affect your payment:
- Telling you your trade-in vehicle is worth less than it really is
- Increasing the interest rate a few points
- Adding thousands of dollars in back-end products, such as an extended warranty
- Inflating the price of the vehicle artificially
- Decreasing the amount of your down payment without telling you
- Simply writing down a higher monthly payment and hoping you will just accept it
More than likely, the manager will use more than one of the above tactics in order to try to get you to pay more for your chosen vehicle. You might think this doesn’t happen often, but in reality, it happens approximately 95% of the time. This scam may have crossed over into the realm of illegal once the dealer told you the price of the vehicle, the dealer obtained and reviewed your credit report, or the salesperson or manager told you the interest rate or term of the loan.
The payment packing scam can end up costing you thousands of dollars over the life of your loan. If you suspect a dealership of perpetrating this ruse on you, it may be worth your while to find out what your rights are and whether you have any legal recourse.
Don’t try to go it alone
The internet contains a plethora of information about an infinite number of topics. However, when it comes to understanding your legal rights and learning whether you have the ability to take legal action, you may want to avoid going it alone. Auto dealer fraud is not an area of the law practiced by many attorneys. You may be better off seeking a consultation with an attorney with extensive experience in it before moving forward.