Dealerships Rip You Off With The "Four-Square," Here's How To Beat It

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AZCreeker

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What are your four-square horror stories?
This my go to article to explain to people how not to get screwed, and to realize that the only thing that should be negociated is the price of the actual truck:

Dealerships Rip You Off With The "Four-Square," Here's How To Beat It

By Ben Popken March 30, 2007
Former used car salesman Alan Slone grows a conscience and reveals one of the major strategies dealership use to screw you when buying a new car.

At the heart of it all is the “4-square,” a sheet of paper (sample above) divided into four boxes: your trade value, the purchase price, down payment, and monthly payment. This is supposed to help you and the dealership come to an agreement, but as you’ll see, it’s really more akin to three-card monte dealer’s deck of cards. Many, but not all, dealerships use this tool.

Here’s 5 tips to get you started, and then a very detailed breakdown of how the dealership manipulates buyers with the four-square.

1) GET YOUR FINANCING THROUGH THE CREDIT UNION BEFORE YOU EVEN STEP ON THE LOT.

Once a car salesman knows you don’t need financing, they’re more willing to be forward with you and knows they don’t have to work on the payments with you, because it won’t help. We’ll still try to beat whatever APR you’re getting at the bank and offer you payment deals, but forget them. You’ve got it worked out, and only need to know the price – bringing us to the next point.

2) DON’T HAGGLE OVER ANYTHING BUT THE PRICE.

This seems obvious to most of the readers of The Consumerist, but most people miss this – especially if they’re getting dealer financing.

3) DO YOUR HOMEWORK.

Know what the MSRP of the car is, know what your trade is worth. (Here’s a hint: take the NADA and subtract about $2K – used cars are appraised by books that aren’t published to the public, so it’s not blue book or NADA value. It’s called “black book” value; “black books” are published weekly by companies such as Manhiem Auto Auctions (http://www.manheim.com/), and these show the going price at the auction, that week, for your car. Basically, wholesale cost.)

4) LET THEM KNOW THAT YOU KNOW WHAT THEY ARE DOING.

If you read this article, you are already ahead of 99.9% of the people walking in. They’ll cut most of the ******** with you if they know that you’re not going to fall for it.

5) UNDERSTAND THAT YOU ARE NOT GOING TO PAY COST FOR THE CAR, AND THE AMOUNT YOU PAY OVER COST WILL BE MORE THAN YOU THINK.


6) HERE’S HOW THE FOUR-SQUARE WORKS:

The “worksheet” (or four-square, as it’s called) is the first thing a person will see when they sit down to negotiate a car’s price. This sheet is used both in used and new car sales. When the interested party sits down, they’ve already driven the car, and have talked to the salesman about what they’re looking for. The salesman has had the trade evaluated, if there is one, and has gotten the customers something to drink to take the edge off.

After sitting everyone down, the salesperson starts filing out the four-square. A blank one looks something like this:

4square1.jpg


The salesman will only put down the make, model, VIN and customers information (not pictured). Then, the salesman will have the customer initial the part that says “I will buy today if numbers are agreeable to both parties.” If there’s any resistance (which normally there isn’t), the salesman simply says that its to make sure that the customer really is ready to drive the car off the lot today – IF they can get the numbers right. I never had anyone not sign the form who was actually willing to buy the car today. By doing this, you have shown your commitment to the manager in the tower (tower: back room, usually behind glass, where the salesman goes to confer with his manager.)

(A note about the tower: This is where the deal actually takes place. The salesman you are dealing with is NOT who you are negotiating with – the sales manager, who sits behind a desk (and is usually one of the scummiest people you’ll ever meet) is who’s actually going to be haggling with you. This will not happen in front of you, nor will you see what is actually happening. It’s a bit of theatre, this part.)

The salesman will then take the paper up to the tower, and when he returns, you’ll see something like this:

4square2.jpg


The salesman will start, very matter-of-fact, going over the numbers with you. First, he’ll start with the value of your trade.

The value of your trade, as listed, is $3000. You, expecting at least 5k for your beater, are unhappy with the number. That’s fine, the salesman says. We’ll get to that in a moment. He then goes on, very quickly, to just state the price of the car. Salespeople are instructed to move over these parts of the sheet VERY QUICKLY, as you’ll see in a moment.

Next, he arrives at the down payment square, which is easily double what you’d hoped to put down today on the nice new Prius you now want very badly. Lastly, he arrives at the monthly payment. “That payment is outrageous! I can’t afford that!” is what you’re probably thinking. All in all, these are pretty crap numbers from what you see.

THESE NUMBERS ARE MEANT TO INSULT YOU AND PUT YOU ON THE DEFENSIVE, ESPECIALLY THE LAST TWO. The idea here is that, unless you’re really observant, to get you less concerned about the overall price of the car and what your trade is worth (we’ll go into trade manipulation in a moment), and get you to the payment plans offered at the bottom. The salesman, who knows you are steamed, will keep on acting like nothing is wrong, and hand you a pen to sign by the X. This is done for two reasons – 1)You might be the biggest, dumbest sucker we’ve had today and actually agree to these terms (happened twice the three months I did this), or 2) You look like the aggressor when you say you won’t sign.

When you decide state that those numbers don’t work for you, the salesman will ask which numbers you have a problem with. Most people will go straight to the down payment, as that’s usually the part that most people gag on, followed closely by the trade in value. The salesman will then either talk about your trade (and proceed to downplay the car as much as they can – that’s usually pretty easy), or will go directly to the down payment. Very discreetly, the salesman will fold the four square so that the only figures you see when you’re talking are the down payment and monthly payment.

The salesman will then say “Well, what were you thinking about putting down today on the car?” You’ll respond something like 1500, 1000 or even less if you’re in a bind and NEED the car but are broke. The salesman will nod, and act as if he’s empathetic with your plight – those bastards up in the tower *are* asking too much from you! He’ll then cross out the down payment number and write in the number you’re looking for.

At this point, the salesman will say something to the effect of, “Well, we may be able to get that down payment done for you. But, as I’m sure you know, the less you put down today, the more you’ll have to pay off on the car – so this payment is likely to go up. What were you looking to pay on the car for payments?” You respond, “I didn’t plan on paying that much, must less more!” The salesman will pause, hoping that his last line will sink in a bit and you’ll either acquiesce to the current number or offer something higher.

If you don’t, and insist that you were only planning on paying $300 a month for the car, the salesman will say, “I don’t think I can do this, I really don’t. But, I tell you what; my manager is crazy today and hasn’t sold that many cars – he’s really under the gun from upper management to get some cars out today, and he might just do this. Tell you what – if I can get these numbers, would you buy the car right now?” You say, “Well, sure, I guess.” The salesman will say, “Okay, can you write me a check for the down payment so I can take it up there? They’re not usually willing to turn down someone if I show up with cash in hand!” (Real reason? People are really unwilling, for some reason, to ask for a check back later if negotiations start to break down.)

Most people, at this point, will write the check – if the salesman is good enough with the snow job, people will honestly think that they’re getting a good deal and that they need to do everything they can to get the manager to cave and sell them the car for next to nothing. The salesman will also get you to sign the form, by the X, saying that you’re agreeing to the new numbers, not the old. He’ll then put on his “wish me luck” face, and trudge up to the tower to haggle with his boss, the mean ol’ manager.

(A note about the X: There’s nothing legally binding here, BTW. You could sign your SSN, your blood type, and your name all on that line – but there’s nothing binding on either party to make that happen. It’s a precursor to the real deal with all the lovely paperwork in finance…but not the actual deal. However, the dealerships make you do this so you’ll think its official and leverage yourself into thinking you may have just bought a car.)

The salesman will return, with a huge grin on his face, and something like this:

4square3.jpg


He’ll say, “Wow! He really is in a tough spot! He was willing to let this go for the down payment you wanted! But, like I was saying, he couldn’t really hit the payment you were looking for because he went down so far on the down payment, and he can let it go for this. (Motions towards new payment offer.) Would this work for you?” You will sit and look at the number, and wish you weren’t buying a car today but instead on vacation. You will either agree, and we’ll enter the final turn, or you’ll go another couple of rounds with them until they either meet you somewhere in the middle, or you start to walk out.

(Note about “walking out.” This doesn’t work if your offer is, truly, unrealistic. You need to do your homework before going in – this includes finding out how long the car has been on the lot [just driving by and seeing it for a couple of weeks is good ammo], what the going rate is for those cars, and above all else, securing your financing before you get there, so you’re more worried about the ACTUAL PRICE OF THE CAR instead of these ******** terms.)

Now, lets say you’ve got a problem with the trade price, as well as the other figures (other than price.) The salesman (and manager) will probably agree to whatever price you want for your trade, within reason. So, assume the sticking point is that you want $5,000 for your trade – that’s fine, we’ll just say it’s going to be bought for $5000. We simply move around the price of the car to $2,000 more, and you’re in the clear. You don’t notice, we don’t say anything, and you feel happy. This is the way that dealerships do the whole “push pull or drag” sales where they’ll give you $5,000 for an engine block.

So, at this point, we’ll assume that you’ve gotten everything square and you’re ready to close the deal. Sometimes, if the manager feels especially nasty (or has gone a few rounds with you via the worksheet), they’ll come out of the tower and say “Folks, I’m (******* McDouchebag), the sales manager here. Congratulations! You’ve just bought a car! We were able to get the payments to $310 – I know you wanted $300, but that was the best we could do. That’s close enough, right?” They’ll nod their head (another psychological trick to get you to agree), and almost every time the person says “Yea, that’s fine!” The problem is, they didn’t realize that a $10 payment bump over a 5-year loan nets an extra $1k in profit for the dealership. It’s called “the $10 (or $15, or $20) close”, and I only saw it fail when a person was really, really exasperated with us. The deal ends, and you wake up in a year realizing that, somehow, you’re $6,000 upside down on your car, while the dealership is laughing all the way to the bank.

So, those are the major pitfalls associated with the four-square; it looks really unassuming on its face, but its designed to make you pay more, and not realize what’s going on. The manager, during negotiations, will write in BIG BIG letters, will turn over the sheet if he needs room, and will write over other things in order to make it as confusing and hard to deal with as possible in attempts to wear you down and make you sign.

The saying we used to have around the lot was “It’s like the Dallas Cowboys playing a Pee-wee Football team.” The average car salesman does this dance 4 times a day – you do it once every 3-5 years. They are better, and they will get you on some level. However, by doing stuff like this, you can control how much it happens.

Here’s what a finished four-square might look like:

4squarefilled.jpg


 

JayceeP

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I only negotiate on 2 items: selling price of car (out the door pre-tax) and trade-value if applicable. A simple calculator will let you know your payments if applicable- payments never come up in my car buying conversations. Interest rates are not a big deal either because I can access below-market rates through my bank. Valuing your trade is pretty straightforward because you can look up ballpark values. You'll usually get somewhat close to market value to help with the tax savings. You HAVE to squeeze on selling price.

So, its price and trade. That's it.
 

Rdr854

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I only negotiate on 2 items: selling price of car (out the door pre-tax) and trade-value if applicable. A simple calculator will let you know your payments if applicable- payments never come up in my car buying conversations. Interest rates are not a big deal either because I can access below-market rates through my bank. Valuing your trade is pretty straightforward because you can look up ballpark values. You'll usually get somewhat close to market value to help with the tax savings. You HAVE to squeeze on selling price.

So, its price and trade. That's it.

Pretty much. Where people mess up is saying I want X payment and maybe Y for my trade. That gives the dealership a lot of leverage because they can most likely give you a payment of $X, but it could be for 60, 72 or 84 months. The payment meets your terms, but the term can have a huge impact on the amount financed and interest paid.

When I go into a dealership, I have an idea of what a reasonable trade value would be. Sometimes, I will have gone to CarMax. If I am financing, I will already know my credit score (having checked it that day). Likewise, I will know what price I want to pay, based upon the advertisements in the area for the same vehicle and payment I want to make each month. Finally, I will not budge from a 60 month term (period). Ah, the down payment -- generally, this has always beentags and taxes if anything. The only exception have been the 16 and 17 Suburbans so that I could get the payment down into the range of a Ford Fusion (but that was done only after I had finalized the purchase price and the trade).
 

Danny3737

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I never trade in vehicles anymore, I'd rather have the few extra grand you get screwed out of in my pocket. Second, I research the hell out of what I'm going to pay and never vary off it. I always get the " sorry, we can't sell it at that price". Third, I make the dealer give me an "out of the door price". Every dealer will try to add on all the fees like dealer prep, processing fees, etc and that can easily add up to over an extra grand

It's always best to have financing in place before you go in and if they can beat the rate you got, then that is great. The only time I go to the dealer is to see and drive the vehicle and to know what options I want. After that, all the negotiations are done via email. I don't have time to spend a whole day at the dealership haggling. It doesn't matter whether you're buying new or used, the process is always the same. Most of all, never tell a dealer that you need to find something fast.
 

dbbd1

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I like to let them think that I will use them for financing. I will even negotiate the percentage points on the loan. Then I leave the lot and go straight to my credit union to finance the deal.
 

WillCO

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I haven't seen a four square since the early 90s. I'm not any kind of car negotiation badass, but I really don't feel like I need to see the sausage being made. I'm interested in the purchase price net of all incentives and that's pretty much it. I usually don't trade at the dealer.

The payment is an output of the process and really isn't part of the discussion.
 

yates ™

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I never trade in vehicles anymore, I'd rather have the few extra grand you get screwed out of in my pocket. Second, I research the hell out of what I'm going to pay and never vary off it. I always get the " sorry, we can't sell it at that price". Third, I make the dealer give me an "out of the door price". Every dealer will try to add on all the fees like dealer prep, processing fees, etc and that can easily add up to over an extra grand

It's always best to have financing in place before you go in and if they can beat the rate you got, then that is great. The only time I go to the dealer is to see and drive the vehicle and to know what options I want. After that, all the negotiations are done via email. I don't have time to spend a whole day at the dealership haggling. It doesn't matter whether you're buying new or used, the process is always the same. Most of all, never tell a dealer that you need to find something fast.
May be different in different states but here when you trade in you do not have to pay tax on the trade amount which can be enough to make up the difference between selling and trading in.
 

schaffer05

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May be different in different states but here when you trade in you do not have to pay tax on the trade amount which can be enough to make up the difference between selling and trading in.
Every state is different. When I lived in Illinois you paid the tax if the entire vehicle, regardless if there was a trade or not. In Missouri you get a credit whether you sell your car out right or trade. Only kicker is you have to sell your car before you title your new one(within 30 days), and have to buy the new one within 6 months of selling the old one.

I normally sell my vehicles on Craigslist, then use the bill of sale for the tax exclusion. The last one I traded, but I couldn't have sold it for much more than I traded it for. I don't know what they got for my truck, but I traded it for 37 and they had it listed for 37,900 on their website. Sold in 3 weeks. Only reason I paid attention is because they over paid for my truck [emoji16].


Sent from my iPhone using Tapatalk
 

LGSONE

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Sold cars in my college days and this was the first training I had. I just couldn't do that job, nothing sucked more than making a great commission knowing the people got screwed. I wasn't good at the job, I just couldn't look people in the face and lie to them. I'm no angel but that is beyond me. BUT, two can play the game, having the training I did on the 4 square, it is entertaining to play the game (wife has another opinion on that), some will quickly figure out you know the game and then the BS is over with... others, well, play the game, do the walk out thing and then mention "I used to sell cars".. classic look you get back. You want to sell a car or jerk around.

LGSONE
 
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