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If you or somebody you know is looking into purchasing a new vehicle, this is a must read. We know new and used car salesmen can be some pretty slick dudes, but many of us step on the lot with a great deal of emotion and usually little preparedness. Even us car nuts may come in knowing more than the next guy, but a great deal of knowledge about the product you're about to buy may still not prevent you being taken for a ride.
Some dealers use a selling system called the "Four-Square" to play psychological warfare with your wallet. They work this confusing system several times per day, while you purchase a new car every few years. Obviously, they're the wolf and you're the sheep.

The "Four-Square" is a sheet of paper with boxes for trade-in, vehicle price, down payment, and monthly payment. It looks very simple, but for most people, it's like solving Rubik's Cube. Former used car salesman Alan Stone gave The Consumerist some tips on how to tackle the Four-Square, and we've got some of our own ideas, too. Hit the jump to see what a Four-Square looks like, and how you can beat the dealers at their own game.

[Source: The Consumerist]

The above image is an example of the Four-Square trap before it gets too messy

The Four-Square is a way for the dealership to perform a slight of of hand that produces them more profit by getting you to overlook the price of your trade-in, the price of the vehicle, or the finance terms of the deal. You may get them to give you more for your trade-in and accept less of a down-payment, but they'll still get you with the price of the vehicle or the amount of interest you're paying every month. Highlighted are Alan Stone's list of things to remember when purchasing a new car.
  • Get financing from the local credit union before going to the dealership: This gives you one less thing to negotiate with the dealer. Most people don't have the first clue how dealer financing really works, and a quick call to a few credit unions will get you a set rate with no funny business.
  • Only haggle over price with the dealer: The price is the bottom line. If you start arguing over price, finance terms, and trade-in value, they've got you in their Bermuda Triangle.
  • Do your homework: Know the MSRP of the vehicle before setting foot on the dealer lot. Most dealerships now have a website with a listing of their new and used vehicles, with price, level of equipment, and mileage (if used). Once you find the vehicle you like, cross-shop other dealer websites for similarly-equipped cars to verify the price of the one you want.
  • Let them know you know what they're doing: Printing this post up and showing it to them will go a long way toward getting a more honest deal.
  • Understand that you are not going to pay cost for the car. The amount you pay over cost will be more than you think: This is pretty obvious. The dealership is in business to make money. They will never give you the "at cost" price, even if your sister is dating the salesman's brother.
We think Alan's pointers make a great list of things to do to prepare yourself for the exciting yet potentially painful process of buying a new car. Make sure to go to The Consumerist for a more detailed description of how the Four-Square works. There is plenty of insight there on how dealers make money off of your misplaced trust. Alan details how the dealer will get you to initial and sign "promises", and get you to fill out a check with the down payment before you even know what the final terms are. It's a very interesting read.

Here are a couple simple and smart things we do when purchasing a new car.
  • If you have a trade-in, check eBay to see if you can get a better transaction price than you'll get a the dealership. Chances are, if your car is decent, you will. You just have to decide whether selling the vehicle yourself is worth the hassle. A friend of Autoblog got $6,200 on eBay for a 1998 Ford E-150, and the dealer was only willing to give $4,000. We'd say a $2,200 balance is enough to go through the hassle.
  • Bring note paper and a calculator to the dealership. When the dealership gives you terms, just do the math and figure out if they're trying to screw you. If the vehicle costs $10,000 and you're paying $250 per month for 60 months, there's a good chance you can do better.
  • Don't go to the dealership in a great-big hurry. If you want to buy a car and get the hell out of there so you can watch WrestleMania on pay-per-view, chances are you won't get the deal of your dreams. If you take your sweet time and spend a couple hours there, at some point the salesman will get to the brass tax so he can move on to the next victim.
  • If you have a family, don't bring everybody to the dealership for your big purchase. Chances are they will distract you from getting the best deal possible. They will also say stupid things like "what a great deal" or "that's exactly what you wanted".
  • If the salesman asks "What are you looking for with regards to down payment and price?", don't answer him! This is common sense, but not everybody has it. Let the salesman make the offers and you tell him or her if it's good or not.

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    • 1 Second Ago
      • 8 Years Ago
      # 20's comments are 100% true!!!!
      • 8 Years Ago
      first of all As long as you are not paying above MSRP it is not a rip off. Do you go to McDonalds and ask to see what making a cheeseburger actually costs them? Do you go to Wal-Mart and ask how much that pair of Socks or how much that DVD costs them? NO! What has happened is dealers all cut eachothers throats to make the sale and not lose it to their competition. It is only fair for a car dealer to make profit just like any other business. People who burn months of their time trying to figure out what they want are absurd.... If you know you want a Camry, then Why are you looking at a KIA or a FORD? I am firm believer that you know what you want., why is it so diificult for you to just get it? Stop acting like dealers are criminals they are a BUSINESS!!!! Spell it out B-U-S-I-N-E-S-S.... Just like where you work!
      • 8 Years Ago
      When I bought my last car the dealer offered me $8,500 for my trade. I went home, listed it on eBay and sold it for $11,500 and had cash in hand a few days later. A local guy saw my listing, came to look at the car, and hit my Buy It Now price. I had cash in hand within 4 days of getting the offer from the dealer. It was the easiest sale I ever had and I got nearly full KBB retail for it. Why would anyone ever trade in a car to a dealer and let them make the margin on it?

      Worst case, get the trade in value from the dealer and list it on eBay with a reserve a little higher (to cover your eBay fees which are minimal anyway) and consider anything above reserve pure gravy.

      It's amazing that shoppers will spend hours researching the best price for a new car, drive all over town to save a couple of hundred bucks on their new car, then leave thousands on the table with their trade-in.
      • 8 Years Ago
      The most powerful thing you can bring to a car dealership is financing. Then the only things you need to negotiate are trade in and price.
      • 8 Years Ago
      OLD INFO.

      There are hardly any car dealers left that use "four squares". With the increase of computer use in the auto business most have or are upgrading to software that replaces "four squares" to show customers the numbers. The salesman will still ask the necessary information to create a deal printout, but they don't play games with payments like four squares.

      My advice: Go to a dealership that is "modern".
      • 8 Years Ago
      Wow. I think its funny how all these car salesmen here keep talking about how other companies rip you off (mc donalds, chinese restaurants). Yeah, the difference is you're not gonna be paying for that burger for the next 48 months!!

      Its not even close to the same situation. Ok you're in it for the profit, but don't try to rationalize why you take advantage of misinformed customers. Don't act like a used car salesman.
      • 7 Years Ago
      It's amusing to watch all the car salesmen come out of the woodwork to defend the stealership...it's just a tool I tell you!
        • 7 Years Ago
        A colonoscope is just a tool too. The only difference, when used by a doctor, it's well lubricated and the patient is given a pain medication and a seditive. When it's inserted by a car salesman, it's used dry and the only pain medication is the massive feeling of regret later when you realized they just screwed you.
      • 8 Years Ago
      I think the more important issue is - $3000 US for a 1992 Toyota Camry with 110,000 Miles!! Where can I find this dealership, so I can trade one in!!
      • 8 Years Ago
      The four square CAN be used as a tool, unfortunately is used a lot as a rip-off.

      The thing missing is APR if you're financing and things like 'credit life', etc. Those can be packed into the payment while showing the vehicle price at what you agreed upon.

      Be sure to check over your paperwork IN THE FINANCE OFFICE! That is where you may discover that extra couple hundred bucks for 'Credit Life', Paint Protection packages, a 10.9% APR, etc. Or, my personal favorite, Dealer Advertising. If this advertising charge isn't on the invoice in the form of some kind of Dealer Group charge from the manufacturer--DO NOT pay it! The dealer charging you to advertise to you? That's a normal cost of doing business in my book--sorry.

      I used to train dealers in sales & leasing programs. Like the author said, they do this every day. You don't. Do all the research you can...and don't get caught up in the excitement of the moment. Some dealers rely on people investing so much time in the process that they just concede a few hundred bucks. Don't do it. Leave. They'll call you back.

      There are dealers who sell vehicles at a loss (on paper) by giving you a selling price well under invoice. They rely on strong F&I Managers to bump interest rates a couple points, gloss over credit life and advertising charges, etc. If a customer questions it, they can either explain it and move on, or take it off if the customer insists.
      • 8 Years Ago
      Everyone goes to work each day to make a living. Profit is not a dirty word. Everyone has to generate profit to show their value to their employer or they will not be an employee very long. I have been in the business for 13 years and I can tell you that I am still trying to make the same money per deal today as I did 13 years ago. The only difference is now it seems like everyone knows my job as far as what cars are worth and what they should pay. Tell me another profession where you can get on the internet and find out what a guy is making. As long as the customer is happy and the dealer is happy who gives a flying rip what the profit is. My happiest customers are the people I have made the most off of.
      • 8 Years Ago
      Well, I see Brandon Leung (post #1) is a car salesman defending his "honorable" trade.


      Everything on this list is what you SHOULD do to avoid people like Brandon screwing you out of your hard earned money. Just follw the simple steps and get a leg up, that's all.
      • 8 Years Ago
      The 4-square is a shell game. How do I know? If it was a tool, it would be the 5-square sheet. What's missing? the number of months you are making that payment.

      I'm sorry, but you are not, I repeat, not paying 500 under invoice for that car. You are paying your trade in, your down payment and $xxx per month x ## of months. Yes, you can get a 200 monthly payment, for 84 months which means you are going to pay a bit more in interest.

      Your best tools:
      sell your car yourself. painful but you will get more. know this though, your trade-in value, you dont pay taxes on.

      have financing in your hip pocket but be aware of 0% financing or know if 0% is better than the rebate and your own financing.

      know what rebates are out there. not just consumer rebates but rebates to the dealer. Automotive News publishes these weekly. Its an expensive subscription but worth it when you are buying American, and increasingly imports.

      And remember, geez, the dealers are trying to make money too. You dont have to get ripped off but they do want to stay in business.
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