Is Buying a Car at Costco a Good Idea?
From bulk items to free samples, Costco differs from the traditional grocery shopping experience. While the benefits of shopping at Costco are easily understood for household items like paper goods, there are other items you can buy from the retailer that might raise a few questions. This includes Costco’s car buying program, which is growing in popularity. You may be asking yourself, can you actually buy a car at Costco?
The answer is yes, you can purchase a car through Costco - or more specifically, the Costco Auto Program, a third-party program that is governed by Costco and adheres to Costco’s customer service standards.
We’ve done the research to figure out what buying a new vehicle through Costco really entails and if it’s a good idea. Like anything, there are pros and cons to the process, but for a certain buyer, it could be the best way to bring home a new - or used - car. Here’s what you should know about buying a car at Costco.
Costco Auto Program: How it Works
Costco works with select local dealers within a defined geographic radius of a Costco store. These participating dealers are all vetted based on a number of parameters, including customer service indexes and vehicle pricing competitiveness. For each dealership selected to be a part of the program, only a few elite salesmen are permitted to work with Costco clientele. The highlight of the program is a set discounted price that eliminates negotiating and haggling.
Costco has worked to simplify the car search process as well. The Costco website includes comprehensive reviews, detailed product information, and the ability to compare different vehicles side by side.
The site also includes a handy financial calculator to help determine if you can afford the monthly payments and the total price. It will also help you compare buying options to determine which is a smarter purchase decision: taking the manufacturer rebate or opting for the promotional low finance rate. You’ll still need to arrange financing yourself, however, as Costco does not offer loans nor does it partner with any lending institutions.
If you’re in the market for a used car, you can also shop for a certified pre-owned (CPO) car. A certified pre-owned car is a low-mileage, accident-free used car that is typically less than seven years old and has been reconditioned to meet strict manufacturer or dealer standards. It also comes with a manufacturer-backed warranty. (Check out our guide to learn more about certified pre-owned vehicles.) And if it’s time to buy that high-powered toy you’ve always wanted, certain locations let you shop for RVs, jet skis, ATVs, and other similar powersports machines.
Before you begin, make sure to have a Costco membership. As with any other aspect of the company’s shopping experience, you won’t be served if you don’t have your Costco card. If you’re not a Costco member already, expect to pay $60 for the company’s gold star membership or $120 for the executive membership.
The Costco Car Buying Process
Once you’ve decided what vehicle you want, you can contact a Costco call center, or enter your preferred vehicle into the CostcoAuto.com directory. This includes the make, model, year, and preferred trim. Costco will then provide the contact information of a local dealer.
After you select a vehicle, you can go to the participating dealership and meet with an authorized dealer, who will provide you with the pre-negotiated discounted price. These salespeople, known as member advocates, are trained by Costco at each approved dealership to ensure that they adhere to strict standards. You can either accept the offer they provide or walk away.
Does Costco Handle Trade-Ins?
Yes, you can trade in your car through Costco. When you visit the participating dealership, you can work with the Authorized Dealer Contact to trade in your vehicle. The Authorized Dealer Contact will let you know how much money the dealership will provide you for your trade. If you decide to accept the trade, the value of your trade-in is applied to your purchase.
Costco Auto Program Pros
Compared to going it alone, buying a car through Costco is a simple and straightforward endeavor. That simplicity is one of the perks of buying through Costco. All the typical steps involved with buying a car - shopping around, researching information on a million websites, visiting different dealerships, and so on - can be eliminated if you know what car you want.
The most appealing aspect of the program is the pre-negotiated price. Because Costco has the potential to funnel a large amount of customers to participating dealerships, their influence to negotiate a competitive price for their customers is formidable. According to Costco, the average savings on each new car sold through Costco Auto is $1,000. A members-only price sheet that’s available from the dealer will show buyers a breakdown of the final price as well as their Costco-exclusive savings.
Special offers by participating manufacturers can further increase the amount saved. For instance, from October through January 2021, Costco partnered with Chevrolet for a savings event and offered a $1,000 members-only rebate on trucks and SUVs including the Chevrolet Silverado, the Chevrolet Suburban, the Chevrolet Tahoe, and Chevrolet Traverse.
You can purchase cars from mainstream automakers like Honda, Toyota, Ford, Hyundai, and Subaru as well as luxury brands like Audi, Cadillac, and Volvo.
After you’ve purchased your car, the savings continue with discounts off parts, accessories, and services like oil changes from participating service centers. Costco Auto will continue to be a liaison between you and the dealer in the event of any customer service issues.
Costco Auto Program Cons
Like anything, the Costco auto buying program isn’t perfect. There are some limitations to the program that don’t make this the best option for everyone.
One drawback is the actual selection and availability of cars. Simply put, not every car will be readily available through the program. The program only allows one dealer per brand per geographic area. This means you’re limited to what’s on an authorized dealer’s lot for any given brand of car. If the car you want isn’t available at the dealer Costco steers you towards, you could try having the dealer order it direct from the manufacturer or have one shipped from another dealer. Either way, you’re in for a wait.
You also may not get the best price possible by not shopping around or negotiating. This may be a benefit for shoppers who don’t like to haggle. But if you take your time to research deals and dealerships, you might save yourself more money than the Costco auto program will.
On top of all this, Costco dealers are still out to make money - and they’ll make more of it if they can sell you accessories, extended warranties, gap insurance, and all the other extras you might not want or need. Some dealers might try to push you into buying this stuff. This is when that promised no-hassle experience might not feel so no-hassle.
Of course, pushiness in this regard will vary from dealer to dealer, and will happen whether you buy through Costco or go it alone.
Costco isn’t the only retailer that’s doing car buying differently: these days there’s plenty of companies trying to disrupt the traditional car-shopping process. Three notable retailers include Carmax, Carvana, and CarsDirect.
Carmax is probably the most well-known of the hassle-free automotive merchants; though they strictly deal with used cars, their buying process is designed to be easy and stress-free. There’s no haggling over a price and buyers can get a comprehensive Carmax warranty for additional peace of mind.
Carvana is a more recent online dealer that also deals exclusively with used cars. They’re perhaps most famous for their automotive vending machines; deposit an oversized token into the slot and the car you ordered online - without a dealer visit, test drive, or any sort of salesman - will be brought down to you. If you don’t live near one of their car dispensers your purchase can be delivered to you. Carvana also offers direct financing and a seven-day money-back guarantee. More information on How Carvana Works, can be found in our guide.
While Carvana and Carmax only wheel and deal used cars, CarsDirect works with shoppers looking to buy new. Visit their website and find the make and model you want to buy, and CarsDirect will put you in touch with a local dealer’s internet sales department. They’ll also provide you with a build configurator, the latest incentives and finance deals from the manufacturer, and a price point with which to start your negotiating.
All three companies go about their business model slightly differently, and none are exactly like the Costco Auto Program. But they’re all worth checking out if your goal is to avoid the usual dealership two-step and simply buy a new or used car without drama.
Alternatively, if you’re more of a do-it-yourselfer, you can use a search engine to look for cars such as iSeeCars.com, AutoTrader, or Cars.com and visit the dealerships once you have narrowed down your search. You will be in complete control of the transaction and will do your own negotiating.
The Bottom Line
For most consumers, for whom car shopping is more of a chore than a thrill, the Costco Auto Program is a viable option. It eliminates some of the hassle of car buying, and directs you to a single car dealership. Because the need to haggle and hassle over a price is eliminated, the usual dealership pressure should be absent. You’ll either buy the car at the Costco price or go home. It’s a more relaxed car buying experience all the way around.
That said, it’s worth your while to arm yourself with information before you walk into a Costco-authorized dealer. Do a little bit of research beforehand, such as browsing listings and getting a general sense of market value for the particular car you’re interested in; a great way to do this is with pricing and deal-rating tools such as the iSeeCars price analysis, available as part of the sites free VIN check.
Remember, it’s not all about the MSRP or the invoice price - certain models reliably sell for less than their makers price them at, and manufacturer incentives can often drop prices dramatically. This could mean significant savings even without buying through the Costco program. As with all things, it’s worth doing your homework - the more you know beforehand, the better equipped you are to find the best deal out there.
If you’re ready to start the car buying process, you can search over 4 million new and used cars with the iSeeCars.com search engine that helps shoppers find the best car deals by providing key insights and valuable resources, like the iSeeCars VIN check report and Best Cars rankings.
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This article, Should You Buy a Car At Costco?, originally appeared on iSeeCars.com.