The four-square worksheet is a common tool used by car dealerships to present deals. Originating in the 1980s, it often misleads customers by focusing on less critical numbers. The four squares typically include:
- Their Price: The dealership’s price for the car.
- Your Trade Value: The value of your trade-in vehicle.
- Cash Down: The amount of money you put down upfront.
- Monthly Payment: The monthly payment amount.
The Sales Tactic
Salespeople often use this worksheet to steer the conversation towards monthly payments and down payments, rather than the overall cost or trade difference. Here’s a typical scenario:
Backcom
Back Commision Exchange
Trade on MXC
- The salesperson presents the worksheet, pointing to each square.
- They emphasize the monthly payment and down payment, often quoting high numbers initially.
- After some negotiation, they lower these numbers to make the deal seem more attractive, without adjusting the car’s price or trade value.
The Real Focus: Trade Difference
The trade difference is the key number you should focus on. It’s the difference between the dealership’s car price and your trade-in value. This number, along with the total financed amount (trade difference plus your trade-in’s payoff), determines the actual cost of your new car.
Steps to Get the Best Deal
1. Know Your Interest Rate
Get pre-approved for a loan from your bank, credit union, or another lending institution. This gives you a benchmark for interest rates. According to the Federal Reserve, the average interest rate for a 60-month new car loan