How To Negotiate A New Car Price

People who are looking to buy a new car are historically anxious about getting a good deal because of the legacy of the car salesman. Well-versed salesmen know how to make a deal seem like the best thing since sliced bread, only to have the buyers later find out the deal made was only in…
Advertising Disclosure.

Advertiser Disclosure: Opinions, reviews, analyses & recommendations are the author’s alone. This article may contain links from our advertisers. For more information, please see our Advertising Policy.

default image

People who are looking to buy a new car are historically anxious about getting a good deal because of the legacy of the car salesman. Well-versed salesmen know how to make a deal seem like the best thing since sliced bread, only to have the buyers later find out the deal made was only in the best interest of the dealership. It’s not easy to negotiate a new car price, but with a little information, you can at least hold your own. Let’s take a look at one of the more popular negotiation tactics dealerships use.

The Lowdown on the 4-Square Tactic

negotiate a new car price
Avoid the 4-square technique!

Caveat emptor – let the buyer beware – is the mantra you need to take with you to the car lot. While sales personnel have several tricks up their sleeves, probably one of the most significant strategies used is known as the ‘4-Square Method’. This tactic involves a sheet of paper that is divided into four boxes. The boxes are marked with the following categories: trade value, purchase price, down payment, and monthly payment. The sheet of paper is said to help the buyer and the dealership make an agreement.

Surviving the 4-Square

The 4-squared sheet of paper will be the first item a buyer will look at when they sit down to negotiate a new car price at the dealership for either a new or a used car. On the top part of most worksheets will be a statement that says the buyer will buy a car today if the numbers are agreeable. The dealer will make the buyer initial the space next to the statement. Dealers assure drivers they will initial if serious. The sheet is then taken to the ‘secret place’ where the buyer can not see the sales person present the paper to the sales manager who is actually the negotiator. The manager will fill in the boxes and the sale mule will take it back to the buyer and go over each box. Any discontent from the buyer will be acknowledged but passed over.

What it all boils down to is this: the sales team wants to get the buyer riled up over all the other numbers but the price. Many buyers will be insulted about the high down payment costs and the low trade-in price, so much so they forget to look at the price. The sales person will ask the buyers which numbers don’t work for them and almost always the answer will be the down payments, followed by the trade-in value. At some point, the crafty salesperson will actually fold the paper to leave only two squares showing, one of which is not the price. They haggle over the numbers that are least important until the game ends and the buyer thinks they got what they wanted. In reality, the most important factor – the overall price – was completely ignored and left unchanged.

While not all dealerships will use the 4-Square negotiation technique, many will. The only way you can avoid being taken for a proverbial ride is to understand how the tactic works and how you can successfully negotiate a new car price. Here is what you need to know:

How to Walk Away With the Right Deal on a New Car

Get Your Own Financing Before Visiting the Dealership. While dealerships would be happy to help you through the process of in-house financing, it certainly puts you at a disadvantage. Before you even think about hitting the sales floor, you should visit your local bank, credit union, or shop for other lenders to new car financing. If you arrive with financing completed, the car salesperson may be more forthcoming with you about details since they don’t have to play the payments game. The dealership may still try and beat the interest rate you secured but it’s not worth the effort. Know before you go and you can save a lot of cash and hassle.

Focus on the Price. While the 4-square paper puts focus on four things at once, your only concern should be the price. It will be the focal point of your negotiations. If you have already secured financing, you’ll already know how much you can afford. You can more effectively haggle over the price if you are confident about the amount you want to pay. Check out the following locations for price quotes:

Do the Legwork. There are many online resources available to you know to accurately calculate a good price for new vehicles. These sites will also help you accurately understand the value of any trade-ins you have. By researching the numbers before you leave the house, you’ll be able to take an effective stand against whatever the dealer is throwing at you. By understand how pricing works, you have the upper hand in negotiations because you will know right from ridiculous.

Here are more car buying tips that may help you get a good deal on your next vehicle.

Get Instant Access
FREE Weekly Updates! Enter your information to join our mailing list.

Posted In:

About Ryan Guina

Ryan Guina is The Military Wallet's founder. He is a writer, small business owner, and entrepreneur. He served over six years on active duty in the USAF and is a current member of the Illinois Air National Guard.

Ryan started The Military Wallet in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about personal finance and investing at Cash Money Life.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free Personal Capital account here.

Featured In: Ryan's writing has been featured in the following publications: Forbes, Military.com, US News & World Report, Yahoo Finance, Reserve & National Guard Magazine (print and online editions), Military Influencer Magazine, Cash Money Life, The Military Guide, USAA, Go Banking Rates, and many other publications.

Reader Interactions

Comments

    Leave A Comment:

    Comments:

    About the comments on this site:

    These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

  1. Robert says

    Great article. As you say doing the legwork is key. Use the message boards at Edmonds.com and kbb.com to find out the best prices people are actually paying for their cars rather than the false numbers the dealers will give you.

The Military Wallet is a property of Three Creeks Media. Neither The Military Wallet nor Three Creeks Media are associated with or endorsed by the U.S. Departments of Defense or Veterans Affairs. The content on The Military Wallet is produced by Three Creeks Media, its partners, affiliates and contractors, any opinions or statements on The Military Wallet should not be attributed to the Dept. of Veterans Affairs, the Dept. of Defense or any governmental entity. If you have questions about Veteran programs offered through or by the Dept. of Veterans Affairs, please visit their website at va.gov. The content offered on The Military Wallet is for general informational purposes only and may not be relevant to any consumer’s specific situation, this content should not be construed as legal or financial advice. If you have questions of a specific nature consider consulting a financial professional, accountant or attorney to discuss. References to third-party products, rates and offers may change without notice.

Advertising Notice: The Military Wallet and Three Creeks Media, its parent and affiliate companies, may receive compensation through advertising placements on The Military Wallet; For any rankings or lists on this site, The Military Wallet may receive compensation from the companies being ranked and this compensation may affect how, where and in what order products and companies appear in the rankings and lists. If a ranking or list has a company noted to be a “partner” the indicated company is a corporate affiliate of The Military Wallet. No tables, rankings or lists are fully comprehensive and do not include all companies or available products.

Editorial Disclosure: Editorial content on The Military Wallet may include opinions. Any opinions are those of the author alone, and not those of an advertiser to the site nor of  The Military Wallet.