Costco is known for top brands at rock-bottom prices, but would you buy a car at the same place you snag economy-size pretzel bags? You totally can, through the Costco Auto Program. But what’s the deal? And is it really the right way to score your next ride? We investigate.
Yes, You Can Buy a Car at Costco. Here’s How to Get the Best Deal
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Published May 6, 2019
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So How Do You Get Started?
First, it’s important to understand that Costco outsources its auto program to a third party. The company you’ll be working with, while not a Costco-owned entity, adheres to Costco’s customer service and pricing policies. This means that you can appeal to Costco Auto if you have a question, need to find another dealer or don’t have a great experience.
First, do your research, know your budget, and have a sense of the car and the features you want. Next, fill out the form on the Costco Auto site and await a call from the dealership in order to coordinate a test drive. This is important: When you get the call, make sure you’re talking with the authorized dealership, not somebody shady who simply offers the “Costco price” (more on that later).
Wait, Is This Costco or a Dealership?
Yes, you’ll be working with an auto dealer, not Costco, on your purchase. But take comfort in the fact that this is a Costco authorized dealer who has at least one Costco-trained sales person on staff. Sometimes there’s only one person in the dealership who has attended this program, so you might have to wait until that person is available.
Costco authorizes one dealership per brand in a designated area. This means you may only have one option in your town, and if you don’t like the dealer, the deal or they don’t have the car you want, Costco may be a no-go. But, you can always go to another branded dealer and ask for the same price, or you can call Costco Autos for the name of the dealer in another region (you can still go to any dealer for service or recalls).
We found that non Costco dealers will often offer what they call the “Costco price” even though they are not Costco authorized. A word of warning on that front: You may be getting a discount, but you might not get the Costco experience.
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Will They Give Me the Hard Sell?
Part of Costco’s promise to customers is an experience free of pressure to buy and a commitment to purchase. Once you’ve been contacted by the dealership, you should able to take a test drive with no strings attached. And you’re always free to walk away if the car or the deal isn’t exactly right.
While plenty of customers found the experience to be just this, some did not. Many felt that the dealership expected them to buy, pressured them to buy other things—like an extended warranty—and that the overall experience was just a tad icky. That said, Costco members can always call the Member Advocate line for assistance with the purchase, which may be helpful.
Can You Haggle?
The magic of the Costco Auto Program is buying a car at a no-pressure, no-haggle price. Often, dealers will have other things (extended warranty, financing, dealer installed extras, floormats…) to sell you once you’ve agreed to buy the car, and this is where they make money. Costco, however, has also negotiated a discount on these items, meaning you won’t have to haggle to get the best deal. But again, if it's not the right thing for you, be prepared to stand your ground.
The Price: Is It Good?
In theory, yes. The pre-negotiated price offers customers a discount off the manufacturer invoice. A dealer should give customers (in writing):
- The MSRP (price on the Monroney)
- The invoice (price they paid for the car)
- Available incentives from the manufacturer
- Available incentives from the dealer
- Final price should include delivery charge (usually about $900)
Typically, the final price is a discount off of the invoice and any incentives that are available should be included (this can vary by model and type of purchase). Sometimes, however, the price is based on the invoice price plus a small markup. This can depend on the popularity and availability of the car you want. And note that some models will have better deals than others. For instance, there are times when Costco offers extra incentives on specific brands that include a Costco gift card—often up to $700—on top of all the discounts.
If you’re not offered this transparent price in writing, you may not be dealing with the dealership’s Costco representative or, even, a Costco authorized dealership at all.
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So What’s the Best Way to Prepare?
Even the Costco promise can’t protect you if you’re unprepared; this means doing your homework before heading to the dealership. Here’s our checklist
- Know your budget: What can you really afford per month? Know this number clearly (don't share it with the dealer, though; keep it to yourself and use it to check the math on the deal).
- Know your credit score; this is the key to your interest rate.
- Arrange your financing ahead of time. The ability to sign paperwork and have money transferred gives you the upper hand, and if you don’t want to finance through the dealer, you don’t have to.
- Know the car and options you want. You can shop and build the model you want on any brand’s website. Do NOT do this at the dealership.
- Research local dealers. Even the Costco authorized dealer may not be a fit.
- Expect to review papers, examine the details of the deal and if you're financing through the dealer, negotiate your financing. Even with a no-haggle price, there is always paperwork. (Womp womp.)
- Know when to walk away. If things feel “off,” the dealership isn’t transparent, the sales person insults you or they don’t have the car you want, get up and go.
You can read more comments here from readers on their experiences with Costco Auto Program. It’s a mixed bag, but it is possible to get the deal you want at the Costco negotiated price.