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Quoting Payment Ranges (And Why It Is Not A Good Practice)

Robert Ebin /

If you ask 10 different sales and finance employees about their desking practices, chances are that you will get 10 different responses.  Desking practices can differ widely throughout the industry, and while some of these practices are good, others are not so much. Despite their differences, desking practices do all have something in common—all generally involve a salesperson quoting payments to a customer. Especially during this current climate where dealers face a constant dearth of inventory and need to maximize profits on every vehicle sold, we have had an uptick in conversations with dealers about desking practices.  The main focus of this article will be on quoting payment ranges, one of the most common desking practices asked about, and why it is not a best practice.

A Quick Word on Payment Packing

Before our discussion on quoting payment ranges, I wanted to briefly touch on the subject of payment packing. Payment packing is illegal.  This statement should not be a surprise to anyone working in the car business.  It is an unfair and deceptive business practice, and California even has a specific anti-packing statute, Vehicle Code section 11713.19.

Traditionally, payment packing is where a customer is made to believe that a quoted payment is a “base payment,” or one that would only consist of the purchase of a vehicle, but in actuality, the payment has been inflated to allow room, or “leg,” for adding charges for F&I products.  This leg allows the dealer to quote prices for these products that are significantly reduced (i.e., “for only a few dollars more a month you can purchase this service contract”).

A couple of more subtle iterations of conventional payment packing that we have seen are rate packing and term packing.  Rate packing is where a customer is quoted a higher rate than they will generally qualify for, leaving leg for F&I.  In F&I, that rate will be dropped, and some products will be “included” in the deal, allowing the dealer to present the customer with product for little to no extra money per month.  Term packing is similar, but instead of inflating the APR, the desk uses a shorter term (i.e., 36 or 48 months) to calculate the quoted payment.  Then, once in F&I, the term is written at 60 or 72 months, again allowing product to be presented to the customer for little or no extra charge.

Quoting Payment Ranges

Quoting a payment range is, in and of itself, neither payment packing nor illegal. However, doing so can be quite problematic for dealers, as it can give the impression, under certain scenarios, that a dealer is payment packing.  And, as we in California know, the point about compliance is not just to have practices that are legal, but also at the same time to give the appearance to customers that your practices are above-board. Remember, as a dealer in California, as soon as a customer complains, you are fighting an uphill battle, and so it is best to prevent the complaint in the first place.

This gets into the reason why quoting payment ranges is not a best practice.  Consider the scenario where after some negotiations, the desk manager quotes a payment range that has a spread of $35 (say, between $400 and $435 per month).  The manager does not yet quote an APR because they are unsure of the credit tier for which the customer will qualify. The customer agrees and is sent to finance, where the finance manager sees that the customer has good credit and can qualify for the better tier (i.e., the $400 monthly payment). The finance manager sells the customer a service contract, which is properly disclosed.  The service contract ends up being about $35 a month, which increases the monthly payment to around $435 per month (which, coincidentally, is the higher end of the originally quoted payment range). This is not payment packing.  The desk manager here was uncertain as to the rate for which the customer might qualify, and therefore gave a payment range using a higher and lower interest rate, and no leg was built into this deal.  However, this scenario looks an awful lot like payment packing, and it begs the question:  Will a judge or jury buy this explanation?  Do you as a dealer even want the question to be posed to a judge or jury in the first place?

Below are some frequently asked questions that arise when this topic is discussed.

What is a better practice instead of quoting payment ranges?

The better practice, and one that we highly recommend, is full disclosure at the first pencil.  This means that if a payment is quoted, there should also be a term, downpayment, and APR disclosed.  By having all these values, it is unnecessary to quote a range. If you know the term, downpayment, and APR (along with the price of the vehicle), mathematically, you will be able to calculate an exact monthly payment amount.

Recently, we have encountered some F&I worksheets that quote a payment range despite also quoting an APR, a downpayment, and a term. Use of these worksheets can put dealers in rather precarious and perhaps indefensible positions because, as noted above, if the APR, term, and downpayment are given, a precise payment amount can be calculated, giving little room for an innocent explanation as to why the dealer quoted a payment range.

What if we do not know what the customer’s credit looks like?

I think the simplest answer to this question is, “You should!” You are running a risk by quoting a payment without running someone’s credit. We hear from time to time that “some customers refuse to let us run their credit.” Although this may be true, you can still confront this situation without quoting a payment range. For example, you could provide an average APR and tell the customer what their payment would be based upon average credit (what constitutes average credit would depend on your dealership). Alternatively, you could quote a payment based upon credit tiers so long as you explain to the customer the qualification criteria for each tier. If the customer objects to the average APR or lack of specificity with the tiered approach, your response should be that in order to properly quote a payment, the dealer needs to run the customer’s credit.

What if we do not know the interest rate for which the customer will qualify?

Why not?  Your desk managers should be able to make rate determinations accurately, and if not, they need to be trained (or retrained). If a desk manager is pulling credit and quoting payments, they should be able to calculate those payments using the actual criteria set by your lenders.  Many dealers and people in the industry that I have spoken with agree that quoting payments is almost, if not equally, as important as contracting.  And, in light of persistent litigation against dealers in California, well-trained desk managers inevitably lead to lower exposure for dealers, better customer experience, and an overall more compliant salesforce.


If you have any questions regarding this, or any other situation that may arise in your sales or service departments, hotline clients are invited to contact us at (800) 785-2880 (then press “4” for hotline) or

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