Bundling and Payment Packing Scam
Many car dealerships are focusing on F&I (Finance and Insurance) sales to increase profit to used and new vehicle deals. When you`re financing through the dealer you`re likely to encounter car dealer scams known as bundling and payment packing.
Payment packing scam happens when aftermarket products (extended warranties, etc.) are included in your monthly auto loan payment without disclosing. Bundling being a derivative of packing scam occurs when all available F&I products are included into vehicle price or monthly payment whereas the consumer has given its consent to buy only one or two of back-end products.
In short, if a monthly payment is set to be $300 per month without revealing that $50 is a payment for add-on products but not the vehicle itself, it`s packing. Bundling occur when dealer tells the customer that monthly payment quote for F&I products is $80 without revealing the cost of each product one by one.
Why most car shoppers are susceptible for falling for bundling and payment packing scam?
This phenomenon is easy to explain. As the matter of fact most car shoppers focus only on the monthly payment without going into subtleties. And fraudulent car dealers take advantage of this.
Let`s unveil the mechanism of one of the most typical car dealer scams.
For example, if you raise $15,000 car loan with 6% interest for 5 years you`ll have to pay $290 per month. When the price is already negotiated the dealer determines that your monthly payment will be $330 stating that it included warranty protection or other add-ons. The customer won`t realize that the real amount of monthly payment is only $290. Car salesman will make it seem as if the add-on products are included with the car, not that the consumer is paying extra money for receiving them. A monthly increase of only $40 over 5 year loan will bring the dealership extra $2,500 while the customer will be out of pocket.
What to do to avoid this scam?
First of all always arrange your own financing before shopping for a car. If the rates offered by the dealer are better than yours, go with him.
If you apply to dealer for a car loan never concentrate only on the amount of monthly payment. Ask the dealer to disclose the real cost of your car, financed amount, terms and interest rate. You must exactly know how much you will pay for the vehicle and any F&I products you agree to. If you thoroughly analyze these figures the dealer won`t have possibility to pack the payment with add-on products.
What to do if you`ve suffered from bundling or payment packing scam?
Consumers deceived by car dealers need a qualified dealer fraud attorney which will assist them in initiating claims alleging car dealer scams. First the plaintiff can allege that he was unaware that he was purchasing anything other than the car itself. He also may press charges against the dealer accusing the latter in predicating the loan approval and car purchase on buying additional F&I products. If the consumer wished to buy only of back-end products but he was told he couldn`t purchase them independently it`s also can serve a ground for accusation.