Buying a car can be a stressful experience, especially for those who have never gone through the process before. Aside from having to research which car to buy and budget for the true cost of car ownership, you will often be faced with the added pressure of the auto dealership Four Square Technique. If you have never heard of this technique, it’s time you get the inside scope on how car dealerships really work.
Dealers have a worksheet they follow to help them increase profit margins. It’s made up of a grid with four squares that allow whomever is in charge of dealership financing to view the following following and easily calculate how to make the most money off a deal:
- Trade In Value: If you have an older vehicle and are getting ready to upgrade, the dealer will happily apply the credit value of your old car toward your new purchase.
- Purchase Price of Your New Car: This is how much the dealer is going to charge you to get behind the wheel. This number includes the base price of the vehicle, any add-ons you may have selected and applicable taxes or promotional credits.
- Down Payment Amount: Except in the case of special, promotional opportunities reserved for those with great credit, a down payment is required on a car purchase. The dealer takes note of the exact dollar amount you are willing to contribute up front.
- Monthly Payments: The auto dealership financing representative will put down how much you want to pay per month in this section of the form. During your conversations, they will attempt to get you to focus in on this number, as it is easier to imagine than the total vehicle cost.
The “four squares” work in direct correlation with each other. If you want to save money in one place, such as a monthly payment, you may see numbers like your trade in-value decrease. The goal is to work math to the advantage of the car dealership financing department.
If you are concerned about dealing with this system, there are a few things you can do to maintain the upper hand at the dealership. Consider selling your car on your own as you will have more money for a down payment and completely eliminate the need for a trade in. The result will be more bargaining power when it’s time to bargain at the lot.
