Yes, It’s a Good Deal, But There Are Caveats.
For a lot of buyers, Costco is the ideal place to shop: The company is known for great stuff and top brands at rock-bottom prices. It’s the same with cars. You can buy a car at Costco through the Costco Auto Program and get a pre-arranged, rock bottom price on pretty much any car. However, getting that deal isn’t always easy. Here’s our guide and insights from the experiences our readers shared after we published this story about buying a car from Costco.
The Deal: How to Buy a Car at Costco
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.
To get started (after you’ve done your research, know your budget, the car and the features you want and are ready to take a test drive) fill out the form on the Costco Autos site. The dealership will call you to arrange a test drive. This is important: by calling you, you know that you’re talking with the authorized dealership, not a dealer who also offers the “Costco price” (keep reading for more on that).
You’re not buying from Costco, you’re buying from a dealership. But it’s OK.
Costco’s auto program features best pricing on virtually any car and special deals on select models.
Yes, you’ll be working with an auto dealer, not Costco, on your purchase. But take comfort in the idea that this is a Costco authorized dealer who has at least one Costco-trained sales person on staff and he or she should understand the exact details of the program. 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 for you. But, you can 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 often non Costco dealers will offer the “Costco price” even though they are not Costco authorized. You might get the Costco price, but you might not get the Costco experience.
Too good to be true? No pressure, no commitment to buy
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 without being pressured to purchase. And you’re free to walk away if the car or the deal aren’t exactly right.
While many customers found the experience to be just this, many also did not. Many felt that the dealership expected the customer to buy, pressured them to buy other things and that the experience didn’t feel right. Costco members can call the Member Advocate line for assistance with the purchase, or if it just isn’t right, walk away. No deal is a good deal if it isn’t the right vehicle for you.
What isn’t a good deal: Haggling
The magic of the Costco Auto Program is buying a car at a no-pressure, no-haggle price. Often dealers will have other things to sell you once you’ve agreed to buy the car, and this is where they make money. However, Costco has also negotiated a discount on these items! Things such as an extended warranty, financing, dealer installed options and extras (such as floor mats) can also be bought at a discount. But again, if it’s not the right thing for you, be prepared to stand your ground and even walk away if the dealer pressures you to buy things you don’t want.
The Price: Is it a good deal?
In theory, yes. The pre-negotiated price that Costco Auto Program 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). However, sometimes the price is based on the invoice price plus a small markup. This can depend on the popularity and availability of the model you want. Also, there may be better deals on select cars. For instance, there are times when Costco offers extra incentives on select 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 Costco person or even, a Costco authorized dealership.
Getting the best deal means being prepared. Here’s what you need to do
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 the right dealership for you. You should be able to negotiate a similar price from a dealership that wants your business, but of course that’s not the no-haggle offer that Costco makes
- 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 paperwork that has to be completed.
- Know when to walk away. If things don’t feel right, the dealership isn’t transparent, they insult you or they don’t have the car you want
You can read more comments here from our readers on their experiences with Costco Auto Program and the dealers in the program. It’s a mixed bag, but it is possible to get the deal you want at the Costco negotiated price.
Scotty Reiss
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Costco Auto Buying:
I wouldn’t recommend the Honda Windward Dealership in Honolulu. I bought a CR-V and didn’t get any discount. I paid the MSRP. They told me the discount was from the list price which was $3,000 higher than the MSRP. I wasn’t prepared to argue because I went in thinking I was getting a good deal. I love my car but feel like the whole thing was misleading. Very disappointed and will not do this again.
Same happened to me from same dealer. I’ve currently got Costco advocate researching and due an answer tomorrow. If not, I’ll drive back, demand to speak with manager and inform him I have a few thousand rea$on$ to bring some negative publicity their way if they don’t “make a believer out of me!”. How can COSTCO pricing be more than internet price? Bummed and pissed!
I tried to buy a new Toyota Camry and they referred me to a dealership 60 miles away. I live on Long Island and there are 5 Toyota dealerships within 12 miles of my house. This is TERRIBLE and I’m VERY, VERY DISAPPOINTED!
When I read over how the Auto Program worked it explained that there might only be 1 Costco Sales person in the region you reside but for maintenance and recalls you can go to any dealership you choose. Reason being is not every dealership has someone who’s gone through the Costco training program. It comes down to getting the best price on the vehicle. If I had to drive 200 miles to get hundreds or thousands off, I’d drive there. Yes inconvenient but it’s about the bigger picture. I’m right now thinking of using the Costco Auto Prog. and reading reviews but wanted to share what I read.
Beware of dealers that claim they are in the Costco auto buying discount program. If you ask them they will say “yes we are” when they really are not.
I had this happen to me with a Honda dealer and thinking I was getting the Costco pricing. I can only say “remember you are in a car dealership and they will tell you anything you want to here”! Make sure they show you the Costco pricing sheets, and if adding anything extra to the car make sure they also show you each separate discount for those items on Costco pricing sheets.
Unless your very informed with Costco program and pricing prior walking into a dealership, they will take every possible advantage your lack of knowledge. Best thing to do is not buy that car same day; walk away letting them know you are not satisfied with pricing and want to check things out before making your decision. They will try coaxing you when doing this by telling you things like “I can’t promise this price will still be available to you tomorrow or bring the price down slightly. Don’t buy into any of that, walk away. You may even want to wait until they call you back seeing if still interested in Vehicle. Best answer for that is, “not feeling good about my experience and especially the pricing; I like the car although seeing better pricing on similar vehicles that work for me. For me to come back in I would want to know ahead of time what your bottom line is rather than wasting my time and yours.
Never be in a hurry buying a car based on placing your emotions ahead of common sense and knowledge, doing so will always result in favor of dealership and not yourself!
Thank you Gerry!! I’m the shopper and trying to convince my husband to do what you advised has been almost impossible to accomplish. He just wants to walk into a dealership and walk out with a new car in under an hour and it never goes that way so we end up in an argument because he didn’t listen to me. I’ll be showing him your message and hoping it’ll sink in. Thank you again,
BK
1st off, you and every other person that feels they deserve to take food out of a salesman and their families mouths need to be given the same issues at their jobs. You need to have your salaries cut in half each year or your 17 bucks an hour reduced to 8.50 an hour then go about life trying to live positive lives. I’m not a 20 yr vet in auto sales but I do see how sick all of you people are expecting discounts and deals on everything. Quit being cheapskates. you [expletive deleted] go to fast food and pay the prices. you go to the mall and pay. you go to the gas station and pay. etc. it keeps the economy going. you guys are sick individuals that dont deserve any hand outs. Get a better paying job if you cant afford a new vehicle or buy a used model. it’s crazy how cheap the country has become all while you [offensive term deleted] dont negotiate anything in Costco stores, or for the memberships you pay for like dummies all to save 5 bucks in groceries that you buy in bulk and end up throwing out and wasting anyway .
Sounds like a comment from a [expletive deleted] car salesman at a dealership that didn’t get named as the Costco dealership for your area. Stop being so sour you
[expletive deleted].
Tom tom…..you sound like a bitter entitled person. Car dealerships are professional sales entities. They have entire courses and books on how to maximize the sale price to unsuspecting customers. The Costco car program and similar things just even the playing field for the buyer. No dealership will sell the car at a loss. So if the dealership sells the car to the buyer then the dealership made a profit and so did the salesperson.
My mom told me that there are two types of person I can trust, one is Lawyer, two is Car saleman. So you are a Car saleman, should we talk with you?, no-one invite you come in here. This forum is for decent citizen, not for the used car saleman like you. We want to pay for a car which we can afford, Car dealer jacked up the price and a car saleman like you want us to pay for your price? No, we want to pay for the car with our prices, that they called a deal. Get that used car saleman? Go away.
Are you saying we shouldn’t go through Costco and we should try to pay more? How much more should we pay?
If I have seen the car elsewhere, know exactly what I want, don’t need financing. Can this be done all over the phone?
Probably. Call the Costco authorized dealer. You will likely have to go in person to pick up the keys, though! Let us know how it goes!
I am not sure whether Costco Auto Program is a good deal. If the discount is off the MSRP then that is not a deal. Most dealers do not sell their vehicles based on the MSRP. MSRP is a SUGGESTED price by the manufacture. Usually dealer put an Invoice, a selling price that is at least ~$1,000 less than the MSRP. It is an illusion of a discount if the price to Costco members are based on the MSRP (suggested price, not the real invoice). It should be based on the invoice that is advertised by the dealer (not a suggested price). It would be a good deal to have the discount from the Invoice (no need to negotiate) because if the discount is off the Invoice price (NOT THE MSRP), then when can get the vehicles for a least $1,000 less than the asking price by the dealer.