Dealer Techniques: The Four Square

Buying a car is a difficult process for some people. It's right up there with getting married, having a baby and buying a house. You want to get the vehicle you want but at the best possible price. That's where the problem comes in. If you don't know that much about cars or are not used to the process of negotiating, then you feel like you are at a disadvantage. Becoming informed is one the best ways to deal with the nerve-wracking process. One thing to learn about is the dealer technique called the Four Square. This technique is how salespeople work the numbers. They use a worksheet marked into four squares, which covers auto loan payments to trade-in price. It helps them to view the total profit to their dealership while being able to see the various parts of the deal all at once. The worksheet contains the following four sections: – the dealership will give this amount you as a credit for your trade-in. This amount is a credit toward your new purchase. Generally, the dealers like you to put down one third of the new purchase amount. This is a general rule only and differs from dealer to dealer. – this the price the dealer is asking for the new car. They will often write down a base price and add 'plus fees.' This means that there are additional costs like the sales tax, and licensing fees for you to pay. – in this quarter of the worksheet, the salesperson writes down the amount of cash you are willing to put down against the car. If you use a credit card for your down payment, this is still considered cash up front. – In this last quarter of the worksheet, the salesperson puts down how high a monthly payment you are willing to take on. It is this figure that the salesperson will try to get you to focus on, as this is directly influences your budget. It is also a smaller figure than the overall price, so it is easier for most people to consider this amount than the thousands you will pay overall. Each of these four areas is related to the other. As such, what changes are made in one corner can be adjusted again in a different corner. Here's a simple example. If you are concerned about your trade in value and you want to negotiate that figure higher, then the salesperson, to keep you happy, inflates the trade in value but also raises the monthly payments on the loan in the other corner. This way, he gets the same amount of money and you think you have made a good deal. The easiest way to avoid complications of this system is to keep your deal as simple as possible. Did you consider selling your car instead of trading it into the dealer? Could you pay cash and avoid monthly payments? If you can't pay cash, how about getting your financing from an outside finance office, therefore keeping it out of your vehicle purchase. By taking just one of the options and keeping it out of the purchase deal, you will be better able to negotiate the purchase price without playing the four square game. If these options don't work for you, then do your homework first. Crunch your numbers before you go looking to buy. Be firm about your budget and your monthly payment amounts need to be. Research your vehicle and learn what it is worth so you know if you are getting a good deal or not. Write all this information down and take the numbers with you to the dealership. Be knowledgeable and be firm. You will negotiate the best deal of your life this way and you won't overspend with a purchase you might regret down the road.