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Costco Car Buying vs. Buying at the Dealership

Can You Save Money car buying from Costco?

Published November 23, 2018

There’s no question that shopping for a car overwhelms most people. Even when you know exactly what you want, you have to spend time at the dealership haggling over prices and then secure financing. Purchasing a car, whether new or used, requires a good amount of research and time investment. What if there was a way to avoid all that and just get behind the wheel. The Costco car buying program claims to take the uncertainty out of the process, but is it better than heading to the dealership?

It’s estimated that more than a million Costco members have already utilized the Costco car buying service. These members researched vehicles, compared specs, calculated their monthly payments, and got a discount without ever leaving home.

Let’s take an in-depth look into the Costco Car Buying program and see if it’s any better than buying at the dealership. We’ll discuss the key differences and tell you if it’s truly worth it.

1. You Must be a Costco Member

Costco membershipThis might be the biggest perk or disadvantage depending on how you look at it. The Costco car buying program is only available to members. Non-members are entitled to search through the program’s research tools, but only a member will receive the discounted price.

So, would it be worth the cost of signing up for a membership just to get a car discount? Of course, that varies with the deals you find and if you feel the price is justified.

Most non-members prefer to go to the dealership where they don’t need a special membership to shop.

2. Dealership Choice is Limited

costco new car buyingWhen you shop for your own car, you can go anywhere and visit any dealership to get your best deal. With Costco car buying, you only have access to one dealership per brand in your area. That’s because Costco exclusively works with one participating dealership for each brand.

If that wasn’t enough, they also work with a small group of salespeople from that dealership. That’s right; only some of the sales staff are authorized to help customers through the Costco auto buying program.

This makes shopping a little more difficult for some customers, especially if you aren’t satisfied with the dealership Costco recommends. There have even been times that the dealership offered by Costco wasn’t close to the member’s location at all. This would require more effort on the part of the buyer in the long run.

On the bright side, Costco does pick dealerships based on the best prices, reputations, social media presence, and customer satisfaction scores. The customer service team they choose also is rated through satisfaction scores and must be a long-time employee of the dealership.

3. Multiple Research Avenues are Available in One Place

costcoauto research toolsResearch is often the hardest part of shopping for a vehicle. You have to read consumer reports, safety ratings, compare cars to one another, and utilize a financial calculator. The Costco car buying program brings all those tools together in one place to help save you some time.

We are advocates for doing your research before making a car purchase, but it doesn’t hurt that all the tools are in one convenient location. This should save most car buyers a lot of time and energy.

4. The Price is Negotiated Upfront

costco auto programIf you dread having to negotiate at the dealership, the Costco car buying service eliminates that aspect for you. When you talk to your salesperson, you have to take into account their sales goals, inventory pricing, and all the incentives available to get the best price.

When dealing with Costco, they negotiate the prices upfront with your dealership. They evaluate national prices as well as the local market to determine what discount is appropriate. Since they aren’t just offering up one car sale, they also have a decent amount of leverage with dealerships. Most dealerships work with them because of the volume they send their way.

5. Easily Resolve Disputes

Costco customer serviceIf you’re a Costco member, you already know about their extremely generous return policy. It’s common knowledge that this multi-billion dollar organization bends over backward to take care of its members. Purchasing a car is shopping on a much larger scale; this isn’t your grocery bill we are talking about.

If Costco cares so much about your happiness when you purchase a couple hundred dollars’ worth of groceries, imagine how much they’ll care when you buy a new car. Costco aims to ensure that no customer is dissatisfied with the large amount of money they spend on purchasing a vehicle.

Because they only work with a select number of dealers, they can offer superior customer support through the process. Even if you find a scratch after the sale, Costco will work to mediate the discussion between you and the dealer. They believe in advocating for their members.

Considering how much business Costco sends that dealer, it would be likely that the outcome would be favorable for the customer. Imagine trying to do that on your own. You probably wouldn’t be given the time of day.

6. Costco Offers Decent Prices, but They Aren’t the Best

Costco Offers Decent PricesThere’s no denying that Costco car buying offers up some competitive prices. When all is said and done, you only find rock-bottom pricing if you’re willing to do the work. Researching, shopping multiple dealerships, and negotiating is still the best way to buy a car.

With that said, if your time is more valuable to you or you don’t like the art of negotiating, then the Costco car buying service might be suited better to your needs. You can still get a decent deal without doing all the work involved with shopping around.

Of course, it doesn’t hurt to use the Costco car buying program to get a starting point for your negotiations. Once you have their quote, you might do better heading to the dealers yourself.

7. You Aren’t Buying from Costco

ford dealershipWe’ve discussed how great Costco treats their customers, but you need to know that this purchase isn’t through Costco. They are just the middleman between you and a local dealership. There’s little that Costco can do if you don’t like the dealership, salesperson, or the negotiated price. They’ve already agreed to work with the company, a particular person on the sales team, and the price is set in stone; there’s no more negotiation happening.

What’s great to know is that most other dealerships will match your Costco price if you choose to go elsewhere. Of course, you give up the backing of Costco when you decide to do this.

8. No Pressure or Commitment Needed

no pressure car buyingWhat’s great about the Costco car buying process is that you are free from any pressure. There’s also never a commitment to make a purchase. Once the dealership contacts you, you can go for a test drive without feeling obligated to make a purchase. Simply walk away if you don’t like the car or deal.

There have been times when customers reported not feeling this way. Costco partnered dealerships are trained to not pressure members into making a purchase. If that isn’t the case for you, all you need to do is contact the Member Advocate line from Costco and they will work that out for you. No one should be forced into buying something they aren’t comfortable with.

9. Costco Auto Buying Offers More Than Cars

costco autoYou can also use the service to purchase or lease your next motorcycle, ATV, RV, UTV, or snowmobile if you prefer.

How to Use the Costco Car Buying Service

If you feel that Costco car buying is right for you, then we have the steps you need to purchase your next vehicle. The process itself is fairly straightforward. Remember that Costco is outsourcing all purchases to a third-party; you aren’t actually buying your next car from the company themselves.

Make sure you begin the process with any research you want to do on your own. Know what your budget looks like, what kind of car you’re hoping for, and the features you want to see. Then, follow these steps.

1. Start at the Costco Car Buying Webpage

Costco car buying screenThe best place to start is on the Costco car buying website. This allows you to compare all the available vehicles, browse inventories, read customer reviews, and calculate your monthly payments.

If you prefer to call the customer service line and talk with a person, that’s always an option as well. An employee will gladly help you through the process of navigating the website and finding the best deals.

2. Pick Your Vehicle

Before you can move forward, you’ll need to pick a vehicle you want. Choose from your favorite sedans, SUVs, trucks, sports cars, or crossovers. Keep in mind that you won’t have access to the discounted price until you meet with the dealer.

Remember that you can also lease your next vehicle or find pre-owned cars.

3. Customize Your Car

Once you’ve picked the car you’re interested in, it’s time to customize it. Make sure you select all the features, package, trim, and exterior color that suits you. Sometimes, you can’t do this option, it just depends what car you pick.

4. Enter Your Information

Once you’re done with that, you’ll enter your contact information and your membership number. Costco then turns your information over to a dealership in the network and the salesperson gets in contact with you.

When you are filling out the information, there’s a place to mark if you prefer Costco review your purchase once it’s complete. This is helpful if you want to make sure you received the best price.

5. Head to the Dealership

locate a dealerOnce you meet with the designated salesperson, you’ll receive the discounted number. If they don’t have the car you wanted on the lot, you might have to travel to another dealership to get. There’s also the chance they will order it for you from the manufacturer. Of course, you could always take your quote at this point and start negotiating with other dealerships around you.

6. Buy or Lease Your New Vehicle

If you approve of the discounted price, and the dealer has your car in stock, it’s time to go ahead and buy or lease your vehicle. Remember, there’s absolutely no obligation to do that. If you change your mind or don’t like the price, you have every right to walk out.

Don’t forget that you also have the option to trade in your current ride, if you wish. Costco estimates that over 40% of their dealership visits end up in a purchase. Those are pretty good numbers.

Be Prepared and Score the Best Deal

Just because you participate in the Costco car buying program doesn’t mean you’ll get the best deal. You need to be prepared and do all your homework before you make your way to the dealership. We’ve put together a helpful checklist to guide you.

1 – Stick to your budget. Make sure you know what you can afford each month. Keep this in your mind at all times and don’t ever share that number with the dealer.

2 – Check your credit and know your credit score. This is the main factor in determining our interest rate.

3 – Prepare your financing before you go. If you have the ability to transfer the money and sign all the paperwork right away, you have an advantage. There’s also no reason you must finance with the dealer. Sometimes, you’ll get a better deal through your bank.

4 – Know what car and features you want.

5 – Research all the local dealers. The authorized dealership working with Costco might not be the best choice for you. If that’s the case, just take your offer from Costco and head to another dealership that wants your business.

6 – Prepare for paperwork. Just because you got a no-haggle price, you aren’t exempt from paperwork. You still have to complete many items before you can drive away in your new car.

7 – Walk away if you need to. If something doesn’t feel right or you don’t like the dealership you work with, then just walk away.

Other Ways to Get Car Discounts

AAA car buying serviceUsing Costco when buying a car is one way to get discounts, but it’s not the only way. You can also find numerous group-buying discount offers through credit unions, banks, AAA, and the USAA. If you don’t want to participate in car buying with Costco, these might be good options for you as well.

Costco Car Buying FAQ

Here are a few of the most common questions we hear related to car buying through Costco.

1 – How does the Costco car buying service work?

You simply go to the site and pick out the car you want. Make sure you customize it to include all the features you want. Then, you supply your information and membership number so that the dealership can contact you. Once you make a trip to the dealership, you find out what the price of the car is, but you aren’t obligated to take it and they aren’t allowed to pressure you into buying.

2 – How good is the Costco auto buying service?

It depends on what you want to use it for. If you can’t stand the thought of haggling or negotiating with a dealer, then it might be the best way for you to purchase a vehicle. Otherwise, many people enjoy the process of shopping various dealerships until they can get the best buy.

3 – Is the Costco car buying program a good deal?

You will receive a discount off the sticker price, so you are saving money versus just buying a new car. However, if you use our buying a car tips, you are sure to save far more doing your own legwork. With that said, not everyone has the time to invest in getting the best deal and the trade-off of paying a little more for convenience works for them.

Final Thoughts

If you’ve ever used the Costco car buying service, we would love to hear your experience. Did you feel that it was worth the time saved or would you rather have done the haggling yourself? Let the other readers know if they should move forward or start shopping for their next vehicle alone.

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Brian Jones
About Brian Jones

I am an ASE Certified Master Tech, but spend more time with my awesome family now than I do on cars. In my spare time, you'll still find me playing with tools, cars and many other "manly" gadgets.

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