Costco Auto Buying Program: Scam or Good Deal?

costcoauto


I’m paranoid about getting scammed.

It’s almost to the point where I don’t even want to answer the phone out of fear I’ll accidentally blurt out my social security number to someone claiming to work at my bank.

When it comes to car buying, my guard goes up like I’m a schizophrenic at a CIA interrogation.

That’s why I was intrigued when I discovered an auto buying program at Costco. The company claims Costco saves members a lot of hassle and an average of $1,000 off a typical transaction price. It works like this:

Members choose the make and model they’re interested in, then Costco refers them to a local dealer who shows the customer the vehicle’s invoice price, the MSRP, and the Costco no-haggle price.

A no-haggle price with built-in savings sounds pretty good on the surface, but still my paranoia wasn’t eased by browsing Costco’s website. Digging a little deeper online, I found a lawsuit filed in January by a New Jersey woman who says the program is deceptive.

Her main accusation, according the paperwork, is:

The Costco auto program is misleading and deceptive because its “members only” price is exclusively defined in reference to the “invoice price” of authorized dealers. The Costco auto program does not control the underlying invoice price, and its participating dealers can and do manipulate that price in any number of ways.

A-ha! I knew there had to be something. Everyone knows dealers try to squeeze every ounce of cash they can out of people, so if there’s a price they’ll immediately accept, they must have a good amount of profit built in.

If you’d like to try getting a great deal another way, CarGurus can help. The article How To Negotiate a Great Deal on a Used Car can help anyone find and complete a solid deal themselves.

Would you use an online listing site to shop for a used car? Why or why not?

-tgriffith

Find great deals on Used Cars in your area at CarGurus.

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284 Comments

  1. I purchased a car recently through the Costco program, unfortunately, and should have walked out before I purchased. Nothing wrong with the car, but they utilize unethical car dealerships and you end up spending A LOT more. I have purchased many cars on my own, but feel this is the first time I have really ‘been had.’ I complained to Costco, and after I did the leg work on getting some of my money back after I got roped into an extended warranty that was only good at the one KIA dealership Costco had in my area (an hour away). I told the sales person at the dealership I would only sign the papers IF I could get the car serviced at my local dealership. I signed and he had lied. It took months to get the extended warranty removed and the dealership was abusive and unethical. I kept Costco apprised of the situation and they continue to use this dealership. Guess both the dealership ad Costco are getting rich taking advantage of people.

  2. Re: Costco v Truecar
    I spent the weekend looking at Subaru Forester Limiteds. The dealership with the Truecar pricing provided a price that was $2000 above the dealership with the Costco rate.

  3. Get a True Car Price, your Credit Union or Sam’s Club and then ask Costco for their price, you will be shocked at how much higher Costco is. I have a friend and a couple family members that tell me they will beat the Costco price any day, just get it and bring into their Toyota or Honda Dealership.

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