Navigating the world of car buying can feel like traversing a maze filled with MSRPs, dealer invoices, and a plethora of fees. Dealerships often steer consumers towards focusing on discounts from the Manufacturer Suggested Retail Price (MSRP) or dealer invoice, creating the illusion of substantial savings. However, seasoned car buyers understand that the real target is the bottom line – the actual cost to drive the car off the lot, to the penny.
This is where car buying programs like Costco Car Buying Program and TrueCar come into play, promising haggle-free pricing and a streamlined purchase experience. But how do these programs truly stack up, and more importantly, are they genuinely the best avenue to secure the most favorable deal? Let’s delve into a comparison of the Costco Car Buying Program Vs Truecar and explore a potentially even more effective strategy to ensure you’re not leaving money on the table.
Understanding the Costco and TrueCar Car Buying Propositions
Both Costco and TrueCar have carved a niche in the automotive marketplace by offering members and users a purported advantage in car buying. They operate by partnering with dealerships and advertising pre-negotiated pricing, aiming to simplify the often stressful negotiation process.
Costco Car Buying Program: Exclusively available to Costco members, this program connects buyers with participating dealerships that agree to offer prearranged pricing. The allure here is leveraging Costco’s bulk buying power to secure discounts for its members.
TrueCar: TrueCar, on the other hand, is accessible to the general public. It aggregates data on car prices paid by other buyers in your area and provides a “TrueCar Certified Price” from participating dealerships. The platform emphasizes price transparency and aims to show you what others have paid for the same car.
While both programs offer convenience and a degree of price visibility, they often still revolve around the conventional dealership model, where the initial focus might be on savings relative to MSRP or invoice. This approach can sometimes obscure the true final cost.
The Discount Deception: Why MSRP and Invoice Savings Can Be Misleading
The automotive industry has long thrived on the perception of discounts. Dealerships frequently highlight savings off the MSRP or dealer invoice as a major selling point. While these figures might seem impressive on the surface, they often don’t represent the actual best price you can achieve.
The issue lies in the fact that MSRP and dealer invoice are starting points, often inflated figures that leave ample room for dealer profit. Focusing solely on discounts from these numbers can distract buyers from the numerous other charges and fees that accumulate, significantly impacting the final out-the-door price. These hidden costs can include:
- Documentation Fees: Often inflated and non-negotiable.
- Dealer Add-ons: Unnecessary accessories or services pushed aggressively in the finance office.
- Extended Warranties and Service Packages: High-profit items that may not be needed.
- Financing Markups: Higher interest rates or unfavorable loan terms.
By getting you excited about a percentage off MSRP, dealerships can effectively divert your attention from the components that truly inflate the final price you pay. This is why a more strategic approach is needed to ensure you’re getting the best possible deal, potentially exceeding even the perceived benefits of programs like Costco and TrueCar.
Taking Control: The Auction Approach to Car Buying
Instead of solely relying on pre-negotiated prices or advertised discounts, consider adopting a more proactive and powerful strategy: conducting your own auction. This method puts you firmly in control and compels dealerships to compete for your business based on the final out-the-door price.
Here’s how to implement this effective car buying auction:
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Define Your Ideal Car: Pinpoint the exact make, model, trim, options, and color you desire. Be specific to avoid any confusion later.
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Research and Initial Pricing (Including Costco & TrueCar): Familiarize yourself with the general price range for your desired vehicle. Crucially, utilize resources like Costco Car Buying Program and TrueCar to get initial price quotes. Consider these quotes as your starting point, your “worst-case scenario” price. Note these prices are typically still above the absolute bottom line, but they provide a benchmark. Crucially, when you inquire through these programs, ask for the out-the-door price, not just the price before fees and taxes.
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Gather Dealership Contacts: Compile contact information for all dealerships within your comfortable driving radius that sell your chosen make.
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Initiate the Auction: Contact each dealership. Clearly and concisely explain that you are conducting an auction to purchase the specific car you want and you are looking for their best out-the-door price, to the penny. Emphasize that you need the price to include all taxes and fees. Tell them you are collecting confidential bids and will give them and other dealerships an opportunity to beat the best offer you receive. Set a deadline for bids (e.g., end of the week).
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Evaluate and Counter-Offer: Once you’ve gathered bids, review them carefully. Identify the lowest offer. Contact the leading dealerships and inform them you have a lower offer and are giving them a chance to beat it. This creates competitive pressure and can drive prices down further.
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Finalize and Verify: Once you accept an offer, get the final price in writing, itemized, and out-the-door. Double-check everything before you go to the dealership to finalize the purchase.
Costco Car Buying Program vs. TrueCar vs. The Auction: A Comparative Look
While Costco Car Buying Program and TrueCar offer a degree of convenience, they are fundamentally different from the auction approach in terms of control and potential savings.
| Feature | Costco Car Buying Program | TrueCar | Auction Approach |
|---|---|---|---|
| Price Transparency | Offers pre-negotiated pricing to members. | Shows average prices paid; “TrueCar Certified Price.” | Full transparency on out-the-door price from multiple dealers. |
| Negotiation Power | Limited negotiation beyond pre-set pricing. | Limited direct negotiation; relies on TrueCar pricing data. | Maximum negotiation power; dealers compete directly for your business. |
| Savings Potential | Can offer savings compared to MSRP; good starting point. | Aims for fair price; may not always be the absolute lowest. | Highest potential savings; drives prices to the dealer’s true bottom line. |
| Convenience | Very convenient for Costco members. | Convenient online platform for price research and dealer connection. | Requires more effort to contact dealers, but yields greater reward. |
| Control | Moderate; relies on Costco’s pre-negotiated deals. | Moderate; relies on TrueCar’s data and certified dealers. | High; you dictate the process and terms. |
In essence: Costco and TrueCar can be valuable tools for initial research and obtaining baseline pricing. Think of them as providing a “good” price. However, the auction approach empowers you to potentially achieve an “excellent” price by directly leveraging dealership competition. You can even use Costco and TrueCar quotes as your initial “good” price to beat in your auction.
The Finance Office Firewall: Staying Vigilant
No matter which buying method you choose, the finance office remains a critical point of vigilance. This is often where dealerships attempt to recoup profits through hidden fees, add-ons, and financing tricks.
Key Strategies to Protect Yourself in the Finance Office:
- Review Everything Meticulously: Carefully examine every document before signing. Ensure the agreed-upon out-the-door price matches what you were quoted.
- Itemized Pricing is Your Shield: Demand a fully itemized breakdown of all costs. This makes it easier to spot unexpected or inflated charges.
- Challenge Unexplained Fees: Question any fees that were not previously disclosed or seem excessive. Be prepared to walk away if they cannot be justified or removed.
- Resist Pressure for Add-ons: Politely decline any add-ons or services you don’t want, regardless of the sales pressure. Remember, these are high-profit items for the dealership.
- Secure Your Own Financing (If Possible): Obtain pre-approval for a car loan from your bank or credit union. This gives you a benchmark interest rate and reduces the dealership’s ability to mark up financing.
Conclusion: Smart Car Buying Beyond the Surface
While programs like the Costco Car Buying Program and TrueCar offer a step up from traditional dealership negotiations by providing some price transparency and convenience, they may not always unlock the absolute lowest price. By understanding the limitations of focusing solely on MSRP or invoice discounts and by adopting a proactive auction-based negotiation strategy, you can take control of the car buying process and potentially save thousands of dollars.
Use Costco and TrueCar to your advantage as research tools and starting points. Then, leverage the power of competition with the auction approach to drive dealerships to offer their most competitive out-the-door price. And always remain vigilant in the finance office to safeguard your hard-earned savings. By combining smart research with a strategic negotiation approach, you can confidently navigate the car buying maze and drive away with the best possible deal.
