4 NUMBERS DEALERS DON’T WANT YOU NEGOTIATING SEPARATELY! Kevin Hunter

The four numbers dealers don't want you negotiating separately. There are four numbers in a car deal that can cost you thousands of dollars. The price of the vehicle, the value of your trade, the interest rate on your loan, and everything they try to sell you in the finance office. Four numbers and here's something every car buyer needs to understand. The dealership would much rather you look at all four of those numbers as one big car deal in one confusing mess. We don't want you doing that. We want you to tear that deal apart because once those four numbers get lumped together, money can start moving between the columns and the dealership can give you something over here, over there, and quietly take it all back over here. They can make you feel like you won the negotiation when the total transaction still works beautifully for the dealership. So today Liz and I are going to show you the four numbers you should negotiate separately and more importantly we're going to physically show you how money can get shifted around inside the deal because once you see this you'll never look at a car deal the same way again. And this is exactly why one of the worst questions a car buyer can answer is what monthly payment are you trying to be at? Because that's not one of Kevin's four numbers. That's the result of mixing several of the numbers together. Exactly and you don't want to do that. Let's put four columns on the screen. Vehicle price, out the door price, trade value, interest rate, products. Now I'm going to put a fifth box on the screen, monthly payment. That fifth number can be manipulated by changing the other four and by changing your down payment or loan term. That's why we don't negotiate monthly payments ever. We negotiate the components that create that payment. Number one, the vehicle price. Let's say we're buying a vehicle advertised for $42,000. I don't care yet what your trade is worth. I also don't care how much you're financing. I don't care what payment you want. And I definitely don't care which extended warranty the finance manager wants to sell you. Right now we have just one job and we're going to keep it separate. What are we paying for this vehicle? Let's say we negotiate $2,000 off. Our agreed vehicle price is now down to $40,000. Write it down. Freeze it. We're done with that column. And that's important because if you don't have an agreed price, it's very easy to think you got $2,000 more for your trade when you actually pay $2,000 more somewhere else. Bingo. Let me show you. The dealer says, Kevin, you wanted $18,000 for your trade. Great news. My manager stepped up. We got you the $18,000. That sounds like a win, except maybe they didn't move $2,000 on your trade at all. Maybe they simply didn't give you the $2,000 discount on the vehicle. Watch closely to see if the money moves. Vehicle price plus $2,000. Trade plus $2,000. You feel $2,000 richer. The deal structure may have barely changed. That's why we separate the columns. Number two, your trade is an entirely different transaction. Think about this for a second. You're buying their car. They're trying to buy your car. These are two sales taking place at the same time. So why would you negotiate them as though they're one number? Let's say your trade is legitimately worth about $20,000. The dealer offers $17,000. You say no. They then go to $18,000. Then $19,000. Finally, they offer $20,000. Great. But that's only a $3,000 victory if nothing else moved. This is where buyers get into trouble. They become emotionally attached to one number. I got my $20,000 for my trade. Okay. What did you pay for their car? I don't know. What interest rate did you get? I think it was around 8%. How much did you buy in the finance office? About $4,000 worth of junk. Then we don't know whether you won anything or not. This is also why you should know approximately what your trade is worth before you even start negotiating, friends. If you have no idea whether it's worth $16,000 or $21,000, the dealership has an enormous informational advantage. Exactly. Get real data points. Get real purchase offers when possible, like CarMax and Carvana. Look at the market. Then treat your trade like what it is, an asset you are selling. Now let's say we have those two numbers locked. Vehicle, $40,000. Trade, $20,000. Don't let them get blended back together. Now we move to number three, the interest rate. This one gets overlooked constantly. A buyer will spend three hours fighting for another $500 off the car and then walk into the finance office and barely question the interest rate. That makes no sense to me. Your interest rate is the price of borrowing money. It deserves its own negotiation. And this is why we have told people for years, arrange financing before you walk into the dealership. Get your own pre-approval from your bank or credit union. Whatever competitive lender works for you, get approved. Now you have a benchmark. If your credit union said 6.2 and the dealer says 8.4, you have something to talk about. And notice what we're not doing. We're not saying, can you get my payment down another 25 bucks? Because they can do that without improving the interest rate at all. They could just extend your term. 84 months can make a payment look a lot better than 60 months. That doesn't mean the loan got better. It means you're taking longer to pay it back. That's one of the most important distinctions in this whole show. Lower payment does not automatically mean better deal. Exactly. Let's say the finance manager says, I've got good news. And by the way, whenever they say great news or good news, it's always bad news. I got your payment down to 6.25. Your response is how? What interest rate? What term? What amount financed? Did the loan down payment change? Did anything get added to the contract? Show me the numbers because I don't care that you moved the payment. I care about what you moved to get there. Here's where the magic trick happens. Let's stop for a second because this is the demonstration that we really want you to remember. Let's put the four boxes on the screen. Box one, vehicle price, $40,000. Box two, trade, $20,000. Box three, interest rate, 6.2%. And box four, products, zero. Now imagine I let the dealership mix everything together. The salesperson comes back and says, Liz, we couldn't get to your price, but we gave you another $1,500 for your trade. So move the $1,500 from the vehicle column to the trade column. I'm celebrating my great trade value, but watch what happened to the total deal. Not much. Then we get to finance. Liz, we got you approved and kept you right around your target payment. Great, but the interest rate is higher. Move the money again. And for only another $38 a month, we can include protection. Well, move some more money. By the time we're finished, I've won three different times. I thought I won on my trade, my payment, and I got a great warranty for only $38 more per month, except I may have lost on the entire transaction. That's the problem with lumping everything together. The money becomes harder to follow. Number four, finance office products. And this is where people are tired. They've been at the dealership for hours. They've negotiated. They've test-driven. They've waited. The kids may be getting restless. They just want their new car. Now you're sitting across from someone who sells financial products for a living, extended service contracts, gap, tire and wheel, paint protection, key replacement, theft products, maintenance plans, dent protection, absolute junk. Whatever they're offering, some of these products can have value for some buyers. That's not the point here. The point is that each product has a price. So ask for the price, not how much does that add to my payment? I want to know what is the total price of that product. If something costs $2,800, show me $2,800. Don't show me $41 a month. Because $41 sounds small, especially after you've just agreed to a car payment of $700 or $800. It's only another $41. That word only has a lot of expensive products built into it. And if that product is financed, you may also be paying interest rate on it. So we go back to our fourth column. Products, service contract, $2,800. Tire and wheel, $900. Protection package, $1,200. Now I can see it, $4,900. That's very different psychology from hearing, we can protect everything for about $75 more per month. This is why dealers like everything lumped together. Now, let's be fair. There's nothing illegal about structuring a car deal involving multiple moving pieces. I'm not saying every dealership is trying to cheat you. But from a negotiating standpoint, who benefits when there are 10 numbers moving around at once? The person who does this every single day. Not the person who buys a car once every five years. Complexity creates negotiating room. And if you're only watching the monthly payment, I can change the term. If you're only watching your trade, I can potentially recover money on the vehicle price. And if you're only watching the vehicle discount, I can potentially make money elsewhere. If you're only watching the payment and finance, I can add a product and lengthen the loan. But if you have four separate boxes and you refuse to let any of them move, now we have transparency, vehicle price, trade value, interest rate, products, four different negotiations. Here's how I want you to do it. First, negotiate the vehicle. I want to agree on the selling price of this vehicle before we discuss my trade or financing. Done. Second, negotiate the trade. We have agreed on your vehicle. Now let's discuss what you're going to pay for mine. Done. Third is financing. I already have a competitive approval. If your lender can beat it on comparable terms, I'm happy to consider it. Done. The fourth, products. Show me each product individually, what it covers, and its total price. I'll decide which I want, if any. Do you see what we've done here? We've taken a complicated transaction and turned it into four simpler decisions. And there's another advantage. If something changes, you can see it. Yes, that may be the biggest benefit of all. The agreed vehicle price was $40,000. Why does this paper now show $40,995? The trade was $20,000. Why does this now show $19,500? The approved rate was 6.2%. Why does the contract say 7.1%? We declined the service contract. Why is there a $29.95 charge? When everything is separate, charges stick out like a sore thumb. When everything is reduced to your payment is $6.97, those changes can be much harder for a tired buyer to notice. You don't let them pull you back into the payment discussion. You're going to hear this. Okay, but where do you need your payment? The answer, I'm not negotiating a payment. How much are you putting down? We'll get to that after we agree on the vehicle price. What do you owe on your trade? First, tell me what you're willing to pay for it. If we can get you to $6.50 a month, do we have a deal, they ask? No, show me the selling price. You don't have to be rude. You don't have to be confrontational. You just have to be disciplined. The salesperson can ask whatever they want. You get to decide which questions are relevant to the negotiation you're currently having. So here's the big takeaway. If you remember nothing else from this video, please remember these four numbers. Vehicle price, trade value, interest rate, and products. And I'd actually write them down before you ever walk into the dealership. Four boxes. Every time something changes, put the new number in the appropriate box. Then ask, why did it change? Because the most dangerous car deal isn't necessarily the one with an obviously terrible number. It's the deal where you can't tell which number is costing you money. Separate the numbers and suddenly the deal becomes much easier to understand and much harder to manipulate. And if you saw this as being a little bit like the four square, it's kind of like you having your own four square, but you managing it, not the dealer. Now, do you want us on your side? If you've been thinking, wow, Kevin, I understand the four numbers, but I don't want to spend my weekend fighting a dealership over them. That is exactly why we have the Homework Guy hassle-free car buying service. We help car buyers across the United States take control of this process. We help you understand the market. We help you identify the right vehicles. We work through these numbers. We help negotiate the deal. And most importantly, we're looking at the transaction from your side of the table. The dealership has professionals working for them. The salesperson, sales manager, finance manager, they negotiate car deals every single day. There's nothing wrong with that. That's their job. But you don't have to walk into that environment alone and hope to catch on to everything suddenly. Our job is to help you keep these numbers separate, know what you're agreeing to, and keep the deal focused on what matters to you. Because saving $2,000 on a vehicle doesn't help much if you give $2,000 back on your trade. Getting an extra $1,500 for your trade doesn't help much if it disappears somewhere else. And getting a great payment doesn't mean anything until we know the price, rate, term, amount financed, and products behind it. So if you're getting ready to buy your next vehicle and you want professional help on your side, check out the Homework Guy hassle-free car buying service. It's the big red button on the homepage at thehomeworkguy.com. There's a link in the description down below. Let the dealership manage their foursquare. We'll help you manage your own four numbers in your own foursquare. I'm Kevin Hunter, the Homework Guy. And I'm Elizabeth. So do your homework, know your numbers, keep them separate, and never let anybody else turn your car deal into a shell game.