A “4 square” is simply a sales tool used by many car dealers. We will discuss how this works a little later. For now, it is important to understand that buying a car isnt one negotiation, its many: the price, trade-in value, monthly payments, down payment requirements, and the financing. It is important to understand that just because a dealer is making a profit, there are still products and services they offer that are of value to you. Some examples would include: Extended Warranties, Credit Life insurance & Disability insurance, Gap Insurance, Alarm Systems and other aftermarket products. Be sure to choose the ones that are right for you, but make sure you know how much you are paying for each, and don’t pay too much. The idea behind the “4 square” is to help the dealer satisfy you in one area, while maintaining profits in the other. Thats why dealers can sometimes sell cars for a loss and still make thousands on each car deal – be sure to pay very close attention to the entire process. The idea of the “4 square” is to get you to focus on only one area of the sale and not look at all four. You must make sure you know what is happening on all four corners of your car deal. Here are the 4 things that make up a car deal.
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The price they are asking for their vehicle
The dollar value they are showing for your trade
The amount of down payment you need
The total monthly payment (including all options, Tax, title and fees)
The hard truth is that you will always be at a disadvantage when shopping at a car dealership. You are a part time buyer, and the sales professional is a full time sales associate. If he is a professional, he is likely to win at any “game playing” you get involved in. Arm yourself with as much information as possible before going shopping. This should help to even out the odds a bit.
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The first thing you have to understand is what the dealer is trying to accomplish, and why. Games starts even before you visit the dealer, either on-line or in person.
Open a Sunday paper, for example, and just look at the dealer advertisements: They promise super low payments, top dollar for your trade-in, and the best prices in town. But, as with most selling, “buyers beware”! The simple truth is that dealers are always having a “Big Sale”! Thats because consumers automatically translate the word sale into save. Dealer advertising is designed to get you to shop today! They want you to drop everything and rush down in a fit of excitement without stopping to think.
Many dealerships have their sales people practice what are called “Word Tracks”. Word Tracks are pre-rehearsed statements that sales people learn, that help them respond to commonly asked customer questions. A Word Track system is a sales training program designed to put every customer through similar sales steps with the goal of closing that customer for the maximum dealer profit.
The dealers goals are always the same: They want you to pay full sticker for their car. They don’t want to negotiate - only you do. Do you want to spend $300 a month? A savvy seller will get you to pay $400. If you refuse, he will simply switch you to a different car for $300 per month, but it will be a car you could have bought for less. Your job is to negotiate a “fair deal”. A “fair deal” is simply a price and payment that you are willing to pay, at a price and payment the dealer is willing to accept. Easy right … Not quite…
Be aware that car manufacturers control their inventories with the use of incentives such as rebate and special rates. The higher the incentive the more of that product they will sell. This insures that they sell the inventory they sell. These incentives will change throughout the year, depending upon shortages or surpluses of inventory. An incentive is anything that adds extra value to a car. For example of a car list for $30,000 and has a $4000 rebate, then the car is really selling for $26,000. In another example, a car that sell for $30,000 at a 7% interest rate would have payments of around 595.00 a month. The same car at 0% would have payments of only 510.00 a month. This is a huge saving to you. Find out what vehicles have what incentives. This could save you thousands! Check the Edmunds.com Web site for the latest incentives and rebates available for the car you want to buy.
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Car Buying Tips - Understanding the “4 Square”