Car Dealer Negotiations...
No Longer a Four Letter Word
Learn four square car dealer negotiating...
The 8th of 11 essential steps in the car buying guide
The back and forth, the "if I could, would you," negotiating with a car salesman part of buying a car is what most customers dread. I'm hoping to shed some light on the subject here to make this an easier and less stressful process for you.
These simple negotiating tools, a piece of paper consisting of four little squares, have been used to negotiate car deals by the majority of car dealerships across the country for many, many years.
Four square negotiating is so popular with car dealers, because they are very simple and are an extremely effective negotiating tool for car dealership sales people.
These forms will
usually have big titles on them like...
- or a big happy face
- Big Sale
- Deal Sheet
Basically, something trying to portray that you are getting a great deal that you want to take advantage of today.
What it is
really designed to do is...
To blow you out of your seat when you see the first set of numbers. They're ultimately hoping to get your thinking up on the:
- Sales price
- Down payment
- Monthly payments
And get your thinking down on:
This is ultimately done with some smooth talking and general confusion.
Some additional negotiation reads:
Tips on Buying a New Car
Tips on Buying a Used Car
1st Square - Sales Price
The first square that you'll see when negotiating with the car salesman includes the sale price.
Here they will typically show a was and now sales price to make you think that the vehicle you are looking to buy has already been reduced and there is no need to negotiate sales price, because it is already on sale for thousands less.
It's very rare that a car dealership ever has a vehicle "on sale."
The only exception to this would be a reduced price from the manufacturer, i.e. employee pricing, or it's an ad car.
An ad car is a vehicle that's been drastically reduced to make consumers believe the whole lot of cars has been reduced and drive traffic to the dealership.
So please don't fall for the car salesman "it's already been reduced, I don't think there is much more room to go" line.
2nd Square - Trade In Value
The second square that you'll get to when negotiating with the car salesman is where your trade in value will be displayed.
The dealership will determine an Actual Cash Value (ACV) for your vehicle trade in value and then will try to drastically under allow with their first set of figures they present you with.
An example would be the dealership determining an ACV for your trade in of $8,000 (what they are willing to buy it for), but trying to get you to trade it in for $6,000.
If you were to agree, that $2,000 difference would be additional profit to the dealer and the salesman.
3rd Square - Down Payment
The third square you'll encounter is the down payment and this plus the fourth square are the two they want to keep your attention on when negotiating with the car salesman.
Here they will ask for a ridiculous amount of money down. Typically, a figure most people cannot manage, like 30-40% of the sale price.
Don't freak out here if you don't have that much down. That's the point of the four square game they are trying to play with you.
The only time a large down payment like this might be necessary is if you are trading in a vehicle with massive negative equity or if you are in a really bad credit situation.
By the way, bad credit does not always require this much down, but you may have to switch to a different vehicle that allows for a better loan structure for the banks.
4th Square - Monthly Payments
The fourth square is what this little four square tool is all about and it's the dealerships goal to get all of your attention here when negotiating with the car salesman.
Here they will also inflate the actual monthly payments to a level that is way above what the payments should actually be.
The dealership knows that 90% of all finance customers are payment buyers. They want to keep your negotiating limited to the outrageous down payment and the over inflated monthly payments.
They are trying to steer your attention away from the first two squares in the four square, because that's their money so to speak.
Most customers will be blown away by these initial numbers and their typical response will be "I can't put $8,000 down, I only have $1,500," and "I can't afford $500 a month, I can only afford $350 a month."
If you do this, then they've got you right where they want you. Your attention has now been drawn from the sale price and trade in value to the down payment and monthly payment squares.
Don't fall prey! It's an extremely effective method for them!
The best way to work a four square to your advantage is to focus on the top two boxes first when negotiating with the car salesman. These two are the sale price and trade in value.
Reach an agreement on these figures first and then focus on the bottom two boxes, down payment and monthly payment.
I think you'll find it funny when the sales person and closer continue to try and refocus your attention to these bottom two boxes, don't give in.
Follow my advice in this car buying tip and I'm sure you'll realize a much larger savings the next time you're buying a car.Now that you've mastered the four square negotiation process...
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