Smart car buyers know never to set foot in a dealership when it comes time to haggle - it's way more effective to do all your negotiation via phone and email.
What we're going to reveal in this article is the most common negotiation technique dealers use to sucker car buyers out of their hard-earned money.
It's called the 4 Square Method.
The good news is that you will never have to encounter this sleazy technique as long as you follow our car buying method, but it's always interesting to see how slimy dealerships can be when ripping off customers. (Note that not all dealerships use this technique)
The 4-Square method is a negotiation technique that is designed to confuse car buyers by mixing the price of the car, down payment, trade-in value, and monthly payment into one sheet of paper as seen below.
By mixing these all together, the salesman can easily move around the numbers to make it seem like you're getting a good deal when in fact, you're getting ripped off.
Most clueless car shoppers focus on the monthly payment which is exactly what they want since it's the easiest to manipulate.
The salesman knows if they can get you to focus on one square of the worksheet, they can rip you off on the other 3 squares.
Check out how confusing the worksheet looks after going back-and-forth through each square.
Photo courtesy of Edmunds.com
The Consumerist has a fantastic overview of this method and goes into great detail if you're interested in learning more.
In addition, the video below shows how car salesmen are trained in this method.
Avoiding this sales technique is easy if you follow our advice.
First, you should always negotiate each part of the transaction separately.
This means you keep the negotiation of the car price separate from the trade-in, financing, and any other add-ons such as extended warranty plans.
It's important that you arrange your own financing before negotiating the price of the car.
Dealers love to mix the financing with car price negotiation because they can have you focus on monthly payments instead of the price of the car.
The ironic part about negotiating the price of a car the smart way is that it's so easy. It not only saves you a ton of time and hassle, but you will save thousands of dollars in the process.