Costco is known for its bulk items and free samples, but did you know that you can also buy a car from the big-box retail store? It's true:  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. A cursory glance at the facts suggests it might be the most pain-free way to go about the tiring and intimidating task of buying a new vehicle. 

We’ve gone ahead and done some sleuthing to figure out what buying a car through Costco really entails. 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. Read on and decide whether it’s right for you.

Costco Auto Program: How it Works

Costco

Essentially, Costco contracts with select local dealers within a defined geographic radius of a Costco store. These 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 pre-negotiated price that cuts out all bickering and haggling. After the sale, a dedicated customer service call center is there to help in the event you’re dissatisfied with any aspect of your new car.

Costco has worked to simplify the research process as well. The program’s website includes comprehensive reviews, detailed product information, and the ability to compare different vehicles side by side. You can build your ideal example of a particular make and model using their on-site configurator. 

The site also boasts a handy financial calculator that lets you figure out if you can swing the monthly payments or afford the total price. It will even help you compare what’s the better deal - taking the manufacturer rebate or opting for the promotional low finance rate. You’ll still need to arrange financing yourself, however - Costco does not offer loans and nor does it partner with any lending institutions. 

If you’re not in the market for a new car, you can also shop certified pre-owned as well. And if it’s time to buy that high-powered toy you’ve always hankered for, certain locations let you shop for RVs, jet skis, ATVs and other similar powersports machines.

Before you begin, just 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.

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, the December “season of values” sales event lets buyers of certain GM vehicles get a $300 or $700 Costco gift card after purchasing through Costco Auto and filling out a survey.

After you’ve purchased your car, the savings continue with up to 15 percent off parts, accessories, and servicing 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. 

Chief among these relate to 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 might be leaving money on the table by not shopping around or negotiating. This point is admittedly a double-edged sword - those who abhor bickering with a dealer for hours over the bottom line will happily forego any savings that might be strong-armed in the finance office. But if you take your time, research deals and dealerships, and bring your game face to the negotiation table, you may very well 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 dealer to dealer. But keep this in mind if the salesperson starts getting too insistent about selling you the floor mats and tow hitch. 

Competition

Costco isn’t the only game in town that’s doing car buying differently: these days there’s plenty of companies trying to disrupt the traditional car-shopping process. Three notable players in this space 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 startup that also deals exclusively with used cars. They’re perhaps most famous for their automotive vending machines; deposit a kiddie-pool-sized 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 (with a little more care than the average soda machine). 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. 

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 folks, for whom car shopping is more of a chore than a thrill, the Costco Auto Program is a godsend. It strips away the ugly side of car buying and leaves only the fun part - going to the dealer, toying with all the features, and realizing you’ve found the perfect car. 

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. And because the salespeople know that there’s sure to be another Costco car shopper on their way, there’s no greaseball tactics to get you to buy a car you don’t want. It’s a more relaxed 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 and blindly plunk down your money. 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 VIN report.

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.