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I read in another thread about something called "Four Square" method for car sales and how it tricks someone into spending more for a car. I am curious how it works because, even after looking it up and watching a video on it, they never say exactly what the trickery is.
As best I can figure from what I watched and read, they are toying around with monthly payment (increasing the length of a loan to get a lower payment) because length of the loan the only thing that I never saw brought up in the videos. They said "X amount per month" but didn't say how many months/years. It matters! Even at 0% interest, $210 per month for 24 months is more than $400 per month for 12 months. Is it that people fixate on the dollar amount per month and not think about number of months? Are sales people just increasing the length of the loan (or even increasing the cost of the car and the length of the loan... because you could do that and still come out with a lower monthly payment)?
I just want to know so I don't fall victim to it.
I might be having a hard time wrapping my head around it because I am fixated on three things when buying a car, total price, interest rate (if any payments) and no more than a 3 year loan (I won't waver on that). Heck, it's even possible loan is a non issue for me because I might buy used for cash or, if I need a loan, I will go to my credit union (unless there is a 0% APR special at a dealer). So maybe too aware to fall for it (or maybe I don’t get it at all and would be the perfect mark).
I do remember last time I went out looking, the last car salesman I talked to kept trying to talk to me about monthly payment until I asked him how many months the payment was for and what the interest rate was so I could calculate the true cost of the car. Then he tried to talk me into leasing. He did write it all down on paper, but I can’t remember if it was in the typical Four Square.
First, for the record, I car shop all the time because I want to know what I want and what a good value is if the time comes for me to replace my car. I plan on holding on to my current car as long as I can (hey, it still runs great and has everything I need in car). But the car is getting older and it won't last forever (even if I want it to). Who knows, it could be totaled! (It can happen! My very first car was totaled while it was parked in a parking lot... hit by a drunk driver).
I've never seen it in use, and I've bought more than my share of cars (plus worked in finance and wrote thousands of car loans). People have tons of computing power in their own pocket these days, and it's very easy to see what the finance costs and payments are going to be for a certain amount. Finance is not the smoke and mirrors that it used to be. Now the hard sell is GAP, service plans, etc.
This was popular until the internet came around. The premise is still valid though, and they will use confusing numbers/math to make you pay more than you are comfortable doing. Just a few tips.
Know how much you want to spend total (out the door) not payments.
Work with a bank on your own as a separate transaction so they can't manipulate you as easily.
Don't tell them about a trade in until they give you an out the door price.
Deny, deny, deny, all options that you don't want/need.
Seems one of the factors is the monthly payment. So if you are walking in essentially as a cash buyer (using a FI for the loan or just paying cash right out) - you should be fine.
The key to buying is coming up with a realistic price for the car you want and the car you are trading and what that difference is. The numbers on the cars don't matter - just the difference. Do your research up front on the car market, figure out financing beforehand with monthly numbers and length, figure the sales tax and registration costs, and then go in with that difference in mind.
Whenever you are asked about payments, tell them "that isn't a concern" as you already know your target price difference.
If the four square comes out, let them fill it out but tell them you aren't interested in playing four square and want to make it easy. Take the paper and write your REASONABLE offer of "my car and $XXXX for your car including doc fee." Don't add the tax or registration fee - you already have a number in mind for that. If you did your research and the number is reasonable, they should come back with an offer that is close to that. If not, thank them and leave.
First thing is to figure out the car you want and the options you want in it. Go with a friend and drive a few. Have them drive and you're just riding. Have a trigger word where your friend has to get to a appointment. I just tell them I'm looking to buy sketching, but it's not going to be today. If they want to help fine. If not there is another dealer diwn the street
Best way is to first get your own financing from your credit union or bank.
Then see if there are any rebates for the car you plan on buying and which rebates you qualify for. Deduct those from the wholesale price and offer that.
If they come back with the 4 square I would say I need the monthly payment, the down payment tax license and the length of the loan. Monthly payment x the amount of months, is Y. Add Y and Deposit, tax license fees together then substract the trade in is what you pay for that car. Lots of people add the monthly and it seems reasonable. They forget to add the other fees and money.
Get a written quote for your car from Carmax. Tell them you won't take anything less. Tell them AFTER you negotiate the price if the new car. Btw always negotiate the total price as about the door.
Tell them they are more than welcome to run your credit to try and beat your financing deal that you have. Do not tell them your terms. Keep sending it back until you like the rate orvthey beat it.
A finance department isn't required to give you the lowest rate they can get. They will give you the lowest rate you will accept. They may be able to qualify you at 3% but they can sell you at 3.5% they get a kick of .5% back.
And last if you do not like the deal.....walk. If it's taking you more than a hour to close a deal I get up and walk out. Don't give them the keys to your car. You'll be a captive audience as the keys will be with a guy that's gone on a "test drive" or to "lunch. " but will be back soon.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Quote:
Originally Posted by Electrician4you
First thing is to figure out the car you want and the options you want in it. Go with a friend and drive a few. Have them drive and you're just riding. Have a trigger word where your friend has to get to a appointment. I just tell them I'm looking to buy sketching, but it's not going to be today. If they want to help fine. If not there is another dealer diwn the street
Best way is to first get your own financing from your credit union or bank.
Then see if there are any rebates for the car you plan on buying and which rebates you qualify for. Deduct those from the wholesale price and offer that.
If they come back with the 4 square I would say I need the monthly payment, the down payment tax license and the length of the loan. Monthly payment x the amount of months, is Y. Add Y and Deposit, tax license fees together then substract the trade in is what you pay for that car. Lots of people add the monthly and it seems reasonable. They forget to add the other fees and money.
Get a written quote for your car from Carmax. Tell them you won't take anything less. Tell them AFTER you negotiate the price if the new car. Btw always negotiate the total price as about the door.
Tell them they are more than welcome to run your credit to try and beat your financing deal that you have. Do not tell them your terms. Keep sending it back until you like the rate orvthey beat it.
A finance department isn't required to give you the lowest rate they can get. They will give you the lowest rate you will accept. They may be able to qualify you at 3% but they can sell you at 3.5% they get a kick of .5% back.
And last if you do not like the deal.....walk. If it's taking you more than a hour to close a deal I get up and walk out. Don't give them the keys to your car. You'll be a captive audience as the keys will be with a guy that's gone on a "test drive" or to "lunch. " but will be back soon.
We had this happen years ago and came up with a great strategy to get the keys back, bought chocolate candy from their machine and gave it to the kids, and sent them to admire the shiny white car in the showroom.
If you are lucky you may find a really honest and helpful dealership. We eventually did but it took many years and we have bought from them 3 times now. Most recently, just last month we went in with pre-approval from our lender of choice, one of the credit unions we belong to. After getting the deal we wanted ($10k under sticker) and a great trade-in amount, they came up with another lender that offered a lower interest rate by .5%, so we went with them.
Getting back to the 4 square thing, I think it's manipulated in a way to get you off of the price of the car, and center your attention around the car payment. Which is pretty easy to do, because a great deal of people who go in to purchase a car do so in thinking about what their monthly payment is going to be. That's easy for the dealership. They can make the numbers work for just about anybody so as long as the monthly payment is all that is in question. The customer comes away in a brand new car and happy because their car payment is what they were hoping for, but then they're paying on the thing for 7 years at a much higher interest rate than they probably would've had had they gotten in touch with their credit union prior to stepping foot onto the dealership campus.
Thanks everyone. Sounds like it’s mainly what I was thinking with manipulating the loan to make it more appealing. I look at total cost so it’s harder for me to think in monthly payments. I either want to pay cash (my real goal) or if I don’t save enough in time, pay it off as fast as possible. I might get a 3 year loan, but I’ll make up my own payment plan to pay it off in two years or something.
Getting back to the 4 square thing, I think it's manipulated in a way to get you off of the price of the car, and center your attention around the car payment. Which is pretty easy to do, because a great deal of people who go in to purchase a car do so in thinking about what their monthly payment is going to be. That's easy for the dealership. They can make the numbers work for just about anybody so as long as the monthly payment is all that is in question. The customer comes away in a brand new car and happy because their car payment is what they were hoping for, but then they're paying on the thing for 7 years at a much higher interest rate than they probably would've had had they gotten in touch with their credit union prior to stepping foot onto the dealership campus.
Sure. That's why one of the first questions are what are you looking for a payment. Once they know that they will know what car to sell you. They sprays will have you in a certain price affordability bracket.
I usually just start talking about what I'm there for. I usually start asking about the car. I tell them not t worry about finances. If they press the issue I get in my truck and drive off.
I research the car I want, I go on test drives and I let them talk. I buy when I'm ready not when they want me to buy. And I don't trade in a vehicle.
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