Is Buying a Car from Costco a Good Deal?

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MSN Money recently covered the Costco Auto Program, the service where Costco helps members buy a car. Members contact Costco, get directed to a participating dealer, and go to the dealer to receive a car and a pre-negotiated price.

Because Costco has lots of negotiating power, the prices are pretty good. But can you do better on your own? Here's MSN Money's take:

"The Costco prices are very good prices," says Edmunds.com's Reed. "For some vehicles, probably close to within $500 of the lowest price possible."

So, the best you're going to do with this program is getting within $500 of the best price. Personally, I'd like to be within $0 of the best price!

Think about this: if you use Costco, there's now a third party involved in your transaction, one who wants a part of the deal/profit for itself, so it's going to be difficult for this arrangement to be the best price.

MSN Money continues:

The best new-car prices still come from hard-core research and flinty negotiation between buyers and multiple dealers in a competitive environment.

This is the route I go when using my system for buying cars. It seems to have worked out very well for me the past few times I've purchased a vehicle.

That said, not everyone likes to solicit multiple bids and haggle back and forth for the best possible price. Some people prefer a more "civilized" buying experience. I know my wife would prefer this route if she had to buy her own car.

Here's how MSN describes this:

If you're the type of person who dreads buying a new car, then the protected experience of a Costco Auto Program transaction has true value. Costco's price might not be the ultimate low price, but a pain-free transaction at a very good price can often be worth a couple hundred bucks.

And even if you like doing your own negotiations, starting with Costco can have some benefits:

But if you're a Costco member, using the Costco Auto Program makes sense most of the time. Even if you're a silver-tongued negotiator, having the Costco price in hand provides a good jumping-off point for the down-and-dirty of hammering out a deal.

I have never used the Costco Auto Program so I can't comment on whether I think it's worth the effort or not. I simply find the car I want and then start the online negotiation process. Involving Costco might give me a BIT more information, but is it anything that really adds any value? I can go online to see what the car costs as well as what others are paying for it, so what else do I need to know?

Anyone ever use the Costco Auto Program? Why or why not? If you did, how did you like it?

Comments

[The Frugallery]

It seems counterproductive to put another party into the equation who will want to get paid. But like you said above, if you aren't good at negotiating or have panic attacks at the thought, it might be helpful. I would say just do research online so that you know what a good price is.

[Matt]

At costco you need to know your prices. Some are deals while others are not.

Personally I work with an outsanding sale person. I don't think I will change.

[George]

It's just like you say for me. If you are ok with the process of negotiating and are willing to put up with the typical BS of car haggling to save a few hundred dollars, then you are better off on your own. However, I have used the process to get a price on a car for my sister-in-law who was not able to negotiate and it gave her the ability to buy a car at a decent price (a few hundred over invoice).

[Ginger]

I use AMEX and Costco to get an idea of what I should pay, then try to negotiate. If I get under what they would offer a AMEX/costco member I go with it, if not I have a fall back.

[WorkSaveLive]

I've never used the Costco program and you have to assume you're 100% right that they're getting some compensation for being the middle man.

I recently used Hertz Car Sales when I bought our "new" car and was very pleased with them. They were far-and-away the best prices of anything I could find (Craigslist or dealerships).

[Sam]

I have used costco auto program twice. On both occasions costco price was within $300 of the best price. My approach is pretty simple. I use costco price as my starting point and try to get the dealership lower than that. For one car I was able to get another $500 off. On the other occasion the dealership stayed firm at costco price but then I got other freebies thrown in such as 3 oil changes, $50 gas card, a charbroil gas grill ($90 retail, that I sold on Craigslist).

[retirebyforty]

I haven't used the Costco program and would be interested in what kind of deal they can get. In the past, I negotiate with the dealers' internet marketing manager through email. It works pretty well for me, but the Mrs. will probably go with Costco if she has to buy a car.

[Carol]

What about Car Bargains or other car buying programs--has anyone had experience with them? Im considering trading in my car for a Prius. I know that P. is popular so I don't really know if I'd get much $ off.

[jim]

$500 from the bottom price isn't bad. Its probably far better than a lot of people get on their own, plus buying through Costco should be simple and easy by comparison.

Sam's tactic seems pretty smart. Get a quote from Costco then use that as the starting point to negotiate directly with the dealers.