Car Dealer Negotiation Trick: the Dreaded 4-Square

The Dreaded 4-Square is nothing more than a Car Dealer negotiation trick

The “four-square” is a common sales negotiation technique used by unscrupulous car dealers during price discussions. Although we’ve described it as the 4-square, the dealer using it is very unlikely to (You’ll just have to recognize if it’s presented to you).

Kevin Hunter, The Homework Guy has prepared this report for you. Kevin got fired from the last dealership he worked for, for being too honest! There’s no way he would ever have used a four-square to negotiate anything with his car buying customers.

The name “4-Square” comes from the way the paper is divided into four squares, each representing a different component of the sale. Before I get into how and why it’s used, I’ll describe the four boxes. You may not have seen this because in some areas of the country, the 4-square has long since been out of circulation, but we do see it come up on occasion with various car buyers. The squares fall out like this:

Vehicle Price: This is the price of the car being purchased and is usually in the upper left corner of the box. The dealer may start with a higher price to leave room for negotiation in this or the other boxes.

Trade-in Value: This square is for the value of the buyer’s trade-in vehicle and is usually in the upper right corner of the box. Dealers will most often undervalue the trade-in, in the effort to make back money given up elsewhere.

Down Payment: This is the amount of cash the dealer shows you are paying as a down payment. They will often show a higher down payment than they think you can afford so it takes your attention off the other parts that matter more. This box is usually found in the lower left corner of the square. When you complain about too much cash down, the dealer just tweaks it, making you think you gained a concession and won something that makes your life easier.

Monthly Payment: This is definitely the most focused-on square in the entire box, because it shows the monthly payment amount. It’s usually in the lower right corner of the square, and is the ONLY square the dealer wants you to be focused on at the end. Dealers always manipulate this number by extending the loan term or adjusting the interest rate. When you push back complaining about a payment that is too high, the dealer just adjusts the loan term, and boom, you have a lower payment! It feels good, making you think you won. The dealer knows they’ve actually won this negotiation when most of your attention is focused on this box.

Interestingly, the purpose of the 4-square method is NOT to help make things more transparent or more clear to you. Its entire purpose is to distract and confuse the car buyer, and causes you to focus your attention on monthly payments (the kiss of financial suicide) rather than the total cost of the car and the loan. It also takes attention off your trade value, which is almost always way too low. By shuffling numbers between the squares, the dealer can make it seem like the buyer is getting a good deal, even when it would otherwise be clear they are NOT. Because all the numbers are right in front of you on one sheet of paper, you can be fooled into thinking the dealer is just being fair and honest with you.

It’s VERY important for Car Buyers to be aware of this Car Dealer Negotiation Trick and to ignore its intended Car Payment Focus. Focus instead on the total cost of the vehicle and the terms of the financing.

DO NOT ever let Monthly Payments be the reason you make a car buying decision.