Dealerships Rip You Off With The “Four-Square,” Here’s How To Beat It (2007)

Negotiation tactics aside, some useful items are:

- Find out what tax and title should be, assume a $500 "documenting fee" do a notional write up in advance, bring a calculator

- Decide if you are going to get the maintenence plan or entertain it in advance, it can be leverage in the overall deal

- Figure out if you are going to pay for any of their $800 special coatings that are "already on the car" that they will only tell you about at the very end

- Even if you have a good rate from the credit union you may be able to get better or equal from the dealer (manufacturer subsidies). Taking financing from the dealer makes more money for them, so it becomes a lever for you to get the overall price down.

- Take your checkbook (or Amex!) but be ready to bail if they are too stubborn. Leave your contact info and final offer, but the manager already knows you brought your checkbook with you so they will generally come around

2. Cross out the lower right corner, the one that says "monthly payment". You're not taking out a loan. You're paying cash.

3. Cross out the lower left corner, the one that says "down payment", and write 100%. You're not taking out a loan. You're paying cash.

4. All that's left is the price of the car. That is what you negotiate. (Although -- be careful about add-ons such as the $2000 rustproofing.)

Some dealers won't take cash, because it eliminates their ability to engage in deception. If you encounter such a dealer, walk out. If they refuse to let you walk out, call the police.

Tip: you can avoid 100% of dealer nonsense and idiocy by buying a car without going through a dealer. For new cars in the US, the only way to pull this off is to buy from Tesla or a few other boutique EV carmakers. The vast majority of carmakers have no sales channels for new cars other than dealers. You could of course always choose to buy a used car and avoid buying them from dealers.

"Dear ___ I will be purchasing a black model ___ (with the following details) ___ for cash this Saturday. No trade-in. I am sending this email to 10 dealerships. I will reply to one and only one responding email. Your email must expressly state that your quoted price "includes 100% of the money I will have to pay including taxes, registration, plate costs and every other fee".

I will not consider any email that arrives after 6:00PM Friday.

Thank you, _______

I have never received fewer than 6 offers. Most were very close in price. I did not always accept the lowest offer due to issues such as distance, out-of-state, and spirit of the emailed response. This has been so successful that I will never buy a car again without following this scenario.

There is poor advice going on here, once you tell them you have financing they will have less flexibiltiy on the price of the car because the dealerships makes money on the financing.

Better advice is to play dumb and keep your financing in your back pocket for when you meet with the finance guy. Even initially indicate a willingness to use their financing. When with the finance guy ask them to beat your financing terms or offer to go with their financing if they kickback some if the benefit. Even if their terms are lousy, you can immediatly refinance, but still capture the lower cost if the car.

This entirely defeats the four-square method, particularly if you are not using seller's financing.

1. Email fleet@<dealer domain> with the precise spec of the car you want and request a quote assuming cash price. Do this to the 3-4 nearest dealers. (Fleet departments are usually compensated on number of cars moved, not on commission, so they are easier to deal with.)

2. Summarize prices offered by all in an email to all of them and offer them a chance to beat the lowest. State that there will only be one such chance.

3. Go to the new lowest bidder and sign. Walk out in 30 min or less.

This is how I bought my last two cars

This lets me actually have 1 number to focus on and negotiate on, and walk out on. I always say "I'll be back in an hour" and really use that hour to think it over and come to approximately what the price will be.

If you get a 6 year loan, you can do the math dividing it up yourself and then worry about interest later. It's not thaaaat much.

Now. Once you settled on a price, start talking trade-in. The reality is if you know the value of your car on other sites, you generally know what they'll offer. Even with removal of taxes, you can easily calculate how much it is worth. Basically if you get more than $500 more for your car elsewhere, it is worth it.

And now the down payment and interest rate are kinda irrelevant. Their goal is to mess with those but not budge on the value of the car. But since you already did that... Now when you talk interest rates, always reject theirs, then take the next number and basically lower it by a percent. Get them REALLY CLOSE and just force that. The reality is that they ABSOLUTELY have wiggle room within the %. They'll usually try to make cash on you via an extra % or 2. So if they offer you 7% they can easily offer you 4.5%.

The down payment doesn't matter. It is just whatever you put in takes off from the remaining price.

Not affiliated in any way save for I subscribed to their vehicle listing service for a few months while conducting my search.

It’s run by a father who sold cars for a living and now wants to help people save money and better understand the car buying process. He runs it with his son who handles the tech side.

They’ve got a “deal school” that walks you through the whole car buying process. What to expect from the sales and finance people, how to respond to common sales techniques, and how to negotiate for the best deal. Believe it’s free after signup.

They’ve also got a large amount of YouTube videos gaming through common car buying scenarios.

Changed the entire car buying experience. I knew what to expect every step of the way and ended up with a vehicle I enjoy at a price I’m very happy with.

Appears that they’ve started to pivot offering more car buying services for people who don’t want to go through the whole process, but their do-it-yourself materials were golden.

Contact all the dealership of the make you want to buy in a 2 or 3 hour radius and make them play against each other. This works better if you have a couple of weeks/days ahead of you.

Make them believe you will finance (as it allows you to get a better overall price sometimes). Whenever one guy makes an offer, forward it to all the other guys.

It helps if you know what is the lowest realistic number they are able to go to. There are a ton of forums and online communities where people share the numbers they were able to get.

Before getting to the dealership, get your financing in order (so you have an alternative to their financing).

One last trick: Once you get there, try to negotiate the price even lower by accepting to get some extended warranty. The trick is that by law, you can return the extended warranty before it kicks in and recover 100% of that cost!

1. Figure out which model/make car you want.

2. Make a list of, say, 20-30 dealerships which have that car listed at a reasonable price. (Well, relatively reasonable for 2024, let's say.)

3. For each dealership, inquire through text/email about the "out-the-door" price of the vehicle.

4. Only consider dealerships that text you back with a price sheet that shows your actual out-the-door price. Ignore any that have charges for nitrogen in tires, paint protection charge, door guard charge, market adjustment, etc. Ignore any that string you along without giving an out-the-door price. Ignore any that require you to talk fine details about financing before giving you an out-the-door price. (You can let them know you're open to financing, but leave it at that.)

5. Ask the one or two dealer(s) that passed through the filter above to let you take the car to an auto shop that is nearby to the dealer (within, say, 10 or 20 miles), so that you can get an expert opinion. Any dealer that made it past step 4 is likely to also honor this request.

6. If the feedback from the auto-mechanic you chose is satisfactory, buy the car.

In all likelihood, only a single dealership will pass through the filter. You'll be able to negotiate the price (within reason) over email/text. When you show up to the dealership, they'll honor said price and give you a no-hassle car-buying experience.

In my few experiences with this, nearly all dealers fail very early and very obviously in step 4. So it's an optimal filter. (Edit: well, at least in 2024 when there's still a car shortage, at least for used vehicles.)

Even better discuss how lousy the dea isl and how you are ready to walk.

Used to be called “fax-blasting” back when faxes were still a thing.

Firstly work on what negotiators call your "BATNA" (best alternative to a negotiated agreement). Figure out what it is and see what you can do to improve it. In this case, it's another dealership with a better offer or figuring out you can stick it out with your beat-up car a bit longer or whatever. But think through what happens if you can't agree. Then your decision is very simple. If what they offer you (when all's said and done) is not better than your BATNA you walk away. Don't allow yourself to be put under pressure to do a deal you don't like.

The second piece is to be super-clear specifically what your payoff is (in this case price) and maximise that. People often try to confuse the picture by getting you to negotiate on stuff that isn't to do with your payoff (eg throwing in a higher spec or free servicing or high-lifting doorhandles or whatever stuff you don't actually care about). Getting finance before you walk in to a dealership is part of this strategy - what you're doing is taking away levers that they could otherwise use to get you away from negotiating about your payoff or get you to compromise on your payoff itself. If you consider you have a finite number of negotiating bullets you want to spend those maximising your payoff and they are trying to get you to fire off-target.

Next-level thinking on the payoff question is to think about what their payoff might be and try to use that to your advantage. You can often "concede" things you don't actually care about that increase their payoff but don't really cost you anything in return for an improved payoff for yourself. You will absolutely miss this if you have a "zero-sum" mindset. Not super-applicable here but an extremely important and overlooked concept in negotiations in general. You can also use knowledge of their payoff to strengthen your hand. Like say you knew when the sales quotas for the dealership came due or that a new model of this particular car was about to come out - the sales person might be under extra pressure to sell which would improve your bargaining power.

Final point is check your ego at the door. You are trying to maximise payoff not "beat" the other side in the negotiations. Not everything is a zero sum game and if you get too concerned about an ego victory you are probably sacrificing some payoff you could otherwise have had. It's fine for the other side to think they absolutely took you to town if you get everything you want from the negotiation.

The dealer has a staff of people who rip people off all day every day and have experience doing so for years. They have an established process. They have money and time. They have perfected the art of extracting all of the value out of a deal.

You likely buy a car once every N years. You may be okay at negotiating. You may even be good. I guarantee with 99.999% certainty that you are not as good as the dealership by the simple fact that you do it hundreds of times less frequently than they do.

Instead, buy a car on Craiglist. Figure out a car that you want - there are approximately 1000 video reviews for each make and model of car released in the past 20 years on Youtube. Use that to narrow down what you want. Then check the price benchmarking sites like Truecar and KBB for a rough estimate of what you'll expect to pay. Then start to scan FB marketplace and Craigslist for listings. Look for private party (e.g. random people selling their cars), ignore the dealer listings. Be prepared to look at a few cars. Go schedule test drives. If you seriously are interested in a car and think the price is right, pay for a Carfax report. If that is clean (no accidents, not repeatedly registered in different states[sign of concealing accidents]), call around to a few local mechanics and ask them to do a Pre-Purchase inspection. Should be about $150. They will do a basic inspection to ensure the car doesn't have any obvious issues. If that's clean, make an offer on the car.

By doing this you will pay ~10-15% less than a comparable car from a dealer. Literally nothing in this process requires any special technical or automotive expertise. If you want to be a bit more sophisticated you can buy an OBDII scanner from amazon for $20 and check the codes yourself to further suss out issues. It does take a reasonably more amount of time (call it a month for a motivated buyer) than the dealer. If your time is so valuable, you need a car today or you can't be bothered to do the legwork, then going to a dealer is okay - you'll just pay more.

I'm sure a bunch of people will rush in and talk about how you can get screaming deals at the end of the month, with certain incentives, asking for quotes from a bunch of dealers, blah blah blah. This is true, however it's risky because it's complicated (way more complicated than buying private party) and error prone on your part. You will have to understand the (reasonably) complex incentive structure for dealers, which of course varies by manufacturer. Shopping around is theoretically very good but post COVID my experience with dealer salespeople is that the moment they get the sense you have any sophistication, your emails or calls go straight to the memory hole. There are more than enough people that are easier to deal with than you, so they don't need to talk to you.

In summary, when dealing with car salesmen, the original LLM has some sage wisdom "A strange game. The only winning move is not to play."