Q. What is “packing payments?”

A. Packing or loading payments is a slang term used to describe a practice promoted by the credit insurance business and used by the auto industry to get customers to agree to purchase additional products, such as credit insurance, service contracts, chemical protectants, and security devices, without revealing their true impact on their monthly payments.

Packing is played out when a customer finances their vehicle through the dealer. It goes like this. A customer agrees to a purchase price and the dealer quotes a monthly payment approximately $20 to $40 higher than what is needed to cover the price of the vehicle. That creates a “pack” or room in the payment to add in the optional products.

Dealership personnel are trained to suggest to customers during the negotiations that the optional products are included “free” or at reduced cost. Because the monthly payment doesn’t increase and because the customer believes the products are “free” or discounted, most people don’t object when the products are included in the final contract.

Automobile dealers who use “packed” or “loaded” payment quotes try to conceal their actions, so you may not realize immediately that you are being misled. REMEMBER, PACKING OCCURS WHEN YOU FINANCE THROUGH THE DEALER.

Published: Aug 22, 2005