Car Negotiating Tips: The Four Square - How It's Designed To Confuse You
Car Negotiating Tips Part 1: The Four Square And How It's Designed To Get More Money From You
Car negotiating. It really can be quite stressful and kind of takes that thrill out shopping for a car. That is if you don’t know how car negotiation works. Below is a simple breakdown of the car negotiation process and how you can turn the tables on that salesman.
Here’s How It Begins:
You've found the vehicle you want and you're ready to start the car negotiating process. The salesman takes out a piece of paper and draws a large plus sign on it. This is called the "four square."
In the first square he writes the sticker price of the vehicle. In another square he writes your down payment. Then he leaves to talk with his manager assuring you he's going to “work you a great deal!”
After making you wait what seems like an eternity (another tactic designed to make you anxious) he comes back with a big grin on his face and says "good news!" and puts down the paper. The remaining two squares are filled in with your trade-in value and estimated payments.
This car negotiating tactic is designed to throw you off balance. If you are not pre-approved for a car loan you are completely at his mercy. The salesman's job at this point is to get a signed commitment for payments or to make you nervous and keep the payments (a.k.a. price of the vehicle) as high as possible.
Continuing On:
After looking at these numbers state that:
1. The payments are too high and/or
2. The trade-in value is too low.
Then he asks you, "What payments were you hoping to get?" Or "What were you thinking your trade-in was worth?"
These phrases are designed to plant doubt in your mind that you aren’t going to get what you want and you’d better rethink how much you can pay. Let’s say you were hoping for $300 a month. But at this point you are nervous so you say, "Well . . . I can afford $350 if I budget myself." So, already you've come up a bit more than you wanted.
Taking the sheet he writes down $350, then asks the next question "Up To?" Meaning, $350 to $400 maybe? So, the salesman writes down something like "I will buy and drive right now for $350 to $400 a month" and asks you to sign it. Then he goes back to "talk to his manager."
So you see, because you are not pre-approved he has already bumped you up by $100 a month!
After waiting another eternity he comes back with more "Good News!" He's gotten his manager to increase your trade-in by $1,000! Wowee! This lowers your payments down to $475! And it's all written nicely on the four square sheet and circled and initialed by the manager to look official.
So now you're getting a little overwhelmed and start to get up. The salesman sees his commission leaving and stops you. He says, "If I could get the payments around where you want them will you buy the vehicle?"
Listen to the words again, "around where you want them." In car negotiation-speak this translates into about $35 to $50 more than you've already committed to.
At this point he whips out his sharpie pen and starts drawing circles and arrows. Saying things like, "Well, to get payments around where you need them we need to come up in trade or down in price. I need to talk to my manager and see what he is willing to do to sell this vehicle."
Then he'll say, "If I can get my manager to come up in trade or down in price, can you come UP in down payment? So you say, "Well . . . we can give you an additional $1,000 if we eat dog food for a month."
Then he scribbles another "commitment" on the paper and asks for your signature. By now the "four square" is looking a little ragged with numbers and arrows and slash marks everywhere. You're thoroughly confused and tense!
In terms of car negotiating he's got you right where he wants you. He's bumped you up in monthly payment, up in down payment, AND he hasn't touched, or only slightly touched, the price of the car!
TO LEARN HOW TO TURN THE TABLES ON THIS SALESMAN CLICK HERE
So, now you know how the Four-Square works to the dealership's advantage. Now learn what you can do to get the best deal when you shop for a car.
WHAT PRE-APPROVAL DOES FOR YOU
Regardless of your credit score, being pre-approved for an auto loan gives you more options when you walk onto the car lot. Once you’re approved for a car loan you are in the drivers seat! You are free to shop for the BEST vehicle in your price range! Before you start shopping for bad credit auto loans though. Here's some helpful advice.
WHY YOU MUST CHECK YOUR CREDIT
In much the same way that a resume displays your work experience to a prospective employer, a credit report provides prospective creditors (and in some cases employers and insurers too) with a detailed picture of your credit history. And like a resume, your credit report can influence whether you will receive what you are applying for.
AUTO LOAN CALCULATOR
So you know what your pre-approved for. But what will that translate to in monthly payments? Here's a handy car loan calculator.
