Should You Buy a Used Car Through Costco?

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The warehouse club giant has a program to make car buying less stressful and more affordable, but is it worth it? Read on to find out. 

The Costco Auto Program has been around since 1989 and offers members-only pricing on factory certified and select pre-owned vehicles through partnerships with dealers throughout the United States.

To use the program, you can either search for a specific vehicle model or a participating dealership near you, show your Costco membership card at the dealership, and view the Costco member-only price sheet on qualifying vehicles. Costco has claimed that the typical member saves about $1,000 through the program, although the actual savings can vary.

In addition to the broad members-only pricing, the Costco Auto Program often has special incentives on certain vehicles. For example, as of this writing, Costco members can get an incentive of $1,250 or $1,500 on certain pre-owned Volvo vehicles. There are several other offers on the program’s website for both new and used cars, and these can be combined with your member pricing or any other manufacturer’s offers.

Not only does the Costco Auto Program claim to offer members-only pricing, but it only offers pre-owned vehicles that are either factory certified or undergo a rigorous inspection and have at least six months remaining on their original factory warranty.

One of the biggest drawbacks to the program is that to see any actual pricing, you not only need to enter a bunch of information online, but you’ll need to make an appointment with a participating dealer and physically go there. Costco claims that members will not be pressured into buying, but it would certainly be preferable to be able to simply access members-only pricing online. It’s also worth noting that you may still have to negotiate when it comes to your trade-in, and other aspects of buying a car such as financing and obtaining auto insurance aren’t part of the program.

Does the Costco Auto Program actually save you money?

Ultimately, the Costco Auto Program is a way for dealerships to generate sales leads. Dealers pay Costco when they make a sale from the program. That’s not to say that you won’t get a good deal, but this isn’t entirely a member perk — it’s also designed to be an additional revenue stream for Costco.

The Costco member-only price list you’ll get from a participating dealer is designed to be a no-haggle price list. Could you get the same vehicle price anyway by negotiating? Maybe, or maybe not. There’s no way to know for sure if the pricing you get through the Costco Auto Program is actually less than you’d be able to negotiate on your own. That’s just the nature of the used car business. But not having to go back and forth with negotiations to get a fair price can be a big perk to many people.

The kind of savings you might expect

Because of the general lack of pricing transparency in the used car business, there are few definitive real-world examples of how much people save. According to Yelp reviews, here are just a few examples of specific deals members have reported:

$500 discount and some waived add-ons$800 discount on a new vehicle$500 off the advertised price on a pre-owned Honda

Having said that, by far the most common tone of customer reviews is that the value is in the no-haggle structure, not necessarily in the discounts themselves. And it’s worth noting that the average rating based on 461 customer reviews is 4.2 out of 5 stars, which indicates that members are generally quite satisfied.

The bottom line is that the Costco Auto Program can be a good way to buy a car — especially if you don’t like haggling over prices. But because of its no-negotiation nature and the fact that not all dealers participate, it’s not always likely to get you the best possible price. If you’re a good negotiator, you might be able to get a better deal than you’ll find on the Costco price sheet.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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