The Only Number that Counts in a Car Deal

Many car dealers want you to worry about your payments.  They want you to worry about your down payment.  They want you to sort of worry about the price of their vehicle and kind of worry about the value of your trade.  The only number they don’t want you to look at is Trade Difference.  Why?  Because it’s the only number that matters.

Luckily, most dealers are going away from the 4-square worksheets.  They are insulting to today’s informed buyers.  Still, they do exist, and in many instances, they still work through the sheer shock value they allow.

Picture a car salesman walking back from the manager’s office with the work sheet.  They put it down in front of you and start pointing at the numbers.  First, they point at the cost of their vehicle.

“This is ours,” they say.   Notice that they don’t say the number out loud.

They move on to the number in the box to the right.  “This is yours,” they say, again not saying the number.

Now to the big number, bottom left corner.  “With $5,000 down,” they say and without a pause, they slide their pen to the bottom right and continue, “your monthly payments will be $819 per month.”

At his point, some will make a comment about signing next to the X and they’ll get the car into the detail shop.  Most just sit and wait for a response.

How can you respond?  You were trying to buy a 4 year old F-150 for $12,500.  $5,000 down!  Are they crazy?  $819 per month?  This is insane.  It’s time to leave.

BUT, before you get up, the car salesperson stops you.  “I’m sorry, what’s wrong?”

Flustered, you reply, “For starters, there’s no way I’m putting down $5,000.  In fact, I don’t want to put any money down.”

“Well, sir/ma’am, as I’m sure you know, when the down payment goes down, the payments normally go up,” he says.

“And that’s another thing, I told you I needed to be around $250 per month.  What’s this %$&#*@ with $800 per month?”

“Well, sir/ma’am, the best way to buy a truck is through short term loans, that way you spend a lot less in interest.  We’re just trying to save you money and get it paid off quicker,” he says.

“How much would my payments be if it was stretched out longer?  Can we get to $250 per month?” you ask.

“I might be able to.  Let me play with the numbers,” he says, looking very concerned.  “You said you couldn’t put $5,000.  How much can you put down?”

You are flustered, but at least there is a chance that this trip wasn’t a total waste of time.  “I didn’t want to put any down, but I can probably put down $500, maybe $1,000.”

“Okay,” the salesperson says, and he flips the paper over.  On the back he writes, “I will drive this car home for $1,000 down and…”

Now he pauses and looks up at you.  “I know you wanted to spend $250 a month.  If I can get it under $350, would that work for you?”

“No, absolutely not!  I won’t pay a penny over $300 per month!” You say, putting your foot down.  He continues to write, “…$300 per month.”  He draws a line.  You initial.

From there, it’s easy.  There might be one or two more bump attempts as they try to get you to $310 a month, but after all is said and done, they won.

You, the customer, didn’t take any exception to the one number that was implied but never written.  Trade difference, the difference between their vehicle cost and your trade value, is the only number that matters.  With cars getting more reliable and financing companies becoming more competitive, it is possible to get terms that would make almost any reasonably priced car down to really low monthly payments.

The only number worth negotiation is trade difference. It doesn’t matter if they sell their’s for $20,000 and give you $10,000 for yours or if they sell their’s for $15,000 and give you $5,000 for yours.  Either way, you’re still financing $10,000 plus your owed balance on the trade. 

The 4-square is only one technique to get you negotiating on something else.  There are dozens.  No matter what numbers are thrown out, always focus on trade difference.  Remember that the lower the trade difference, the lower the payment, the lower the required down.  It’s basic math, but some car dealers will do anything to make it seem difficult.

This article is to benefit the consumers and is recommended by a few dealers who do not believe in hiding trade difference from you, including Hollywood Honda, Johnson City Honda, and Atlantic City Chevrolet.  These dealers do not pay to be included -- they're just good dealers.