Buying a new car or a used car is stressful, but you can make it a little easier. Before you step into a dealership, there are a few things you should know. Being familiar with the notorious four square car sales technique dealerships use will definitely help.
The four square car sales method is basically a psychological shell game used to confuse potential buyers. The salesperson will continually change four variables – one for each square – on a worksheet to trick customers into paying more for a vehicle.
Not every car salesperson uses the four square worksheet, but it is still out there. Understanding how dealerships use the worksheet for four square car sales could help save you money.
The four squares on the sheet can differ based on the dealer, but they normally follow this same plan. The top left is the value of your trade in. The top right is the price of the new car. The bottom left is the amount you’re willing to put down. Finally, the bottom right is your monthly payment. Your info goes at the top.
Next to your information is the first trick. It’s a psychological one. There will be a line that says something like, “I will buy this car today if the offer is acceptable to both parties.” The salesperson will have you initial beside that. Your initials aren’t binding, but it feels like they are.
Your initials also mean that you’ve made the decision that you’re prepared to buy a car today. It’s easier to have you commit to that, even if it’s just in your head, before getting to the part where you’re going back and forth on the price.
Now the salesperson will take the form to their manager to fill out. They’ll come back with money amounts in each square, and you’re not going to like any of them.
It’s a really, really good idea to have a ballpark idea what the trade-in value is for your car. The same goes for the going rate for the price of the car you’re interested in buying. Compare the prices from a number of sources, then get a good average.
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After you’re presented with a lower-than-expected trade-in value, the salesperson will say that’s okay and that you’ll get back to it later. They then slide quickly past the price and get to the down payment.
At this point, the paper is either folded in half or the top two squares are blocked in some way or another. Now you can just see the squares with the down payment and the monthly payment.
The down payment price they have filled will be large, and the monthly payment probably will be too. The high numbers are meant to make you defensive, even insult you. Here, the dealership wants you to forget about the actual price of the vehicle and think less about your trade. They want you to focus on the two payments on the bottom.
The salesperson might ask you to sign. They want you to take this deal, but they don’t expect you to. The idea is to make you look like the bad guy for not signing.
If you don’t sign, they’ll ask you which numbers are the problem. Chances are, you won’t think back to the trade or the total. Instead, you’ll pick the down payment or the monthly – the two numbers in front of you.
Now is when the negotiating begins. They will start with the down payment. How much were you planning on putting down? Chances are, it’s lower than the number in front of you. They’ll write the new figure down. Now you’re one step closer to the purchase in your head and on paper.
Of course, that lower down payment will change your monthly payments. How much were you looking to pay monthly? They’re hoping you’ll say a number close to the one on the paper. Either way, if you give them a number, you’re another square closer to purchase.
They get you to agree on a number, act like it’s impossibly low, but ask you to confirm you’ll buy the car if they get that figure. If you do, they’ll ask you to initial again. They may even ask for you to write a check for the down payment. In your head, you’ve basically bought the car, it’s just a matter of signing some papers. From experience, they know you’re not going to be very likely to ask for that check back.
The salesperson comes back with a new number on the form. It’s also folded again to show only the monthly payment. You’ll either agree to it or you’ll do a few more rounds.
But the number on the paper is hidden behind scribbles, and doesn’t even show you how all the other numbers in the other squares have changed. Let alone the interest rate or term of the loan.
Now you’re negotiating purely on a payment and not a price. That’s the dealer’s goal and where it can cost you the most money.
Small changes to a monthly payment add up. Even if it’s just a $10 difference. Most customers won’t balk at $10, or $15 or $20. But over the course of a five-year loan, that $10 a month knocks the price up $600, not even including the interest. You’re paying more because you weren’t focusing on the big picture. It didn’t help that the big picture was hidden on the folded piece of paper.
So what’s the work around when dealing with the four square car sales tactic. There are a few ways, and they’re fairly simple.
In this case, your payment is set with the bank and you’re only negotiating the trade and the total cost of the vehicle. The dealer may be able to beat the rate, but you don’t have to take it.
If you do take their financing, they may be able to offer you a better rate or a slightly lower price. That’s because they make money from financing too.
Download a loan calculator app. Put the numbers in every time they change and you’ll know where you stand.
It’s okay to negotiate by monthly payment if you know the full score. A calculator will show you what every change actually means. Just don’t forget about the interest rate and local taxes.
Like we mentioned earlier, the more you know about all the different price points of the vehicles involved, the better off you’ll be.
You may also want to get an idea of how long the car has been on the lot. If you don’t need a car immediately, drive by for a few weeks. The longer it sits, the better position you will be in to negotiate. It’s more like a stakeout than homework.
Stay calm and be polite. Stress can make you agree to something you shouldn’t because you aren’t thinking clearly.
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