When they are buying a car, some people believe that there is some kind of magic or something when it comes to the car buying math. I was always amazed by the car buyer that thought they could buy a $30,000 car, have a $1,000 down payment and expect to have a $300 a month payment. The simple car buying math tells us that it doesn’t work. However the car dealer may make it seem like magic when you are sitting across from the car salesman and negotiating you new car purchase.
What a Deal the Car Buying Math
When you are buying a car, the favorite car dealer scam is the dealers own style of car buying math. Most car dealers use the “Four Square” to negotiate the price and payments on your new car. The car buying math that dealers use on the Four Square is designed to present you with a monthly payment that will put you on the ceiling (the lingo of the car salesman). In other words if your car payments should be about $400 a month the car salesman will present you with a payment of $585 a month. The car buyers response will one of several different reactions;
A. I can’t afford that much a month so they decide to look for a cheaper car.
Rather than look for a cheaper car the car salesman will ask them how much they can afford. Then they will start coming down on the payment until they can agree somewhere higher than $400 a month (the actual payment) or if they have go below $400 a month they will look at cheaper cars.
B. Are you crazy, where did you get that number from?
This reaction is a car buyer that has done their car buying homework. They have done the car buying math and have a pretty good idea what their payment should be. Now that the car salesman knows that they have a customer that has done the research and knows what they are talking about the salesman will start working the real numbers. If they can get this customer to buy a car they will probably get a fair deal.
C. OK, I was hoping for a lower payment, but I can manage that.
The car salesman hit a home run or “Took Your Head Off” (more lingo). The actual car buying math $185 more than the actual payment times 60 months equals $11,100. Now that is what you call a car dealer financing scam. There may only be a small percentage of car buyers that say “OK” when the car salesman presents them with the payment, but you don’t need too many of these customers a month to make a killing. The customer that does not do their homework and is foolish enough to believe what the car salesman tells them assumes that the car buying math is correct. (they get screwed)
Math and Car Buying Math
The above scenarios happen every day at the car dealer. Most times the reactions are A and B, but every now and then option C comes in to buy a car. All the car salesmen love getting an option C for a customer. The customer that doesn’t choose option C are then subjected to the other car dealer scams and car buying math for additional ways to make extra profit at the car dealership.
The car dealers use their own brand of math for car buyers, but when it comes down to filling out the paperwork that you have to sign, all the figures have to work out to like the regular laws of math. The car buying math of car salesman tricks doesn’t fly on the paperwork and the dealer financing agreement.
To protect yourself from the car dealer tricks of car buying math you need to do your homework. Go to the Steps to Buying a Car and be prepared before you go to the car dealer. You can figure out your monthly payment by using the Auto Loan Calculators on our site. Being prepared is the way to avoid car dealer scams.