Beware of the Four-Square rip off

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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