Vincent Rives was looking for a new car, but the process proved overwhelming. Car dealers are known for their hard selling techniques and offering the customer additional products, from tires to floor mats.
He was shopping for groceries at Costco when a Costco Car Program brochure caught his eye. Could the big savings and customer experience you expect from Costco transfer to a car purchase? (1).
Costco promised a fixed price and no haggling, which could turn a six-hour ordeal into an easy one-hour experience.
It wasn’t just the process that was easier, either. Rives ended up choosing the 2025 RAV4 hybrid that cost $48,540, but since he bought it through the Costco Auto Program, it only cost him $36,720, a savings of more than $11,000.
Their approach frames a broader trend in the automotive world: As prices and monthly payments remain near all-time highs, buyers are increasingly willing to explore non-traditional paths to avoid haggling and unexpected costs. Here’s how buying a car at Costco works and what consumers do to find the best deals.
You can’t walk into your local Costco looking for cars on the top shelf. Although the retailer is famous for its wholesale purchases, it does not actually sell cars. Instead, the program is a way for Costco to offer value to both its members and auto dealers by eliminating uncertainty for both parties.
That’s how it works. Costco members take shopping and saving money seriously. When you pay your $65 annually for a Gold Star Membership ($130 per year for an Executive Membership), you show that you’re committed to making Costco your go-to destination for great deals (2).
Costco members are known for their loyalty and the company knows their shopping profile. This is valuable information for a retailer that has to spend large sums of money to attract the attention of someone like you. Armed with this information, Costco goes to local car dealers and offers to act as a middleman for a high-intention customer (you) on the condition that the deal reduces some of their profit margin on the vehicle (3).
Dealers accept lower margins because programs like Costco’s can generate sales volume while reducing the cost of finding a buyer. Since dealers typically spend between $400 and $800 per vehicle sold on advertising, a membership referral channel can serve as a built-in lead source that offsets those marketing costs (4).
Kelley Blue Book data showed that the average transaction price for a new vehicle reached $50,326 in December 2025, explaining why middle-income buyers feel left out of the market or fear being forced to make significant concessions when under the gaze of a high-pressure salesperson (5).
Even when a buyer can technically afford the sticker price of a vehicle, the reality of financing is stretching family budgets to the limit. Experian reports indicate that average monthly new car payments have been around $748, while used car payments averaged $532 in the third quarter of 2025 (6).
For Costco Executive members, who earn up to 2% cash back on their purchases, cash back on a $45,000 vehicle purchase is another potential source of value. But beyond the raw numbers, many buyers are desperate to avoid surprise markups and add-ons.
Negotiation is a major issue for most buyers, and dealers often generate their highest margins through trade-in valuations, finance margins, and end products like extended warranties or protection packages. For buyers like Rives, it’s worth it to not have to worry about negotiating add-ons.
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On the other hand, skilled negotiators can get a better price than the Costco deal, especially if they’re financing the car. For example, if you are pre-approved for a loan, you can ask the dealer to match or beat that rate. Many dealers have access to automaker incentive programs, which allow them to beat a bank’s interest rate, sometimes with financing as low as 0% (7).
While Costco’s club model is popular, it’s just one option among several. AAA offers its own car buying program that promises up-front pricing through a network of certified dealers. Sam’s Club offers a similar service powered by TrueCar, often including after-sales benefits for members (8, 9).
Additionally, many credit unions, like PenFed, combine their financing options with auto-buying portals to provide members with a streamlined experience. All of these programs share the similar goal of reducing initial offer negotiation fatigue (10).
All of these programs work in slightly different ways. Sam’s Club, for example, is more of an online marketplace than a club offering like Costco’s. However, buyers still need to do their homework regarding dealer fees, additional products, and financing terms.
These services reduce the hassle of initial price shopping, but do not replace the need for due diligence, especially since actual savings may vary.
For the best result, buyers should treat membership prices as just one quote within a larger process.
Before visiting a dealership, it’s a good idea to get pre-approved financing from an independent bank or credit union. Buyers should also request comprehensive written quotes that include all taxes and fees from at least two different dealerships to ensure the membership price is truly competitive before visiting the showroom.
It’s also helpful to compare a Costco membership offer, for example, with other portals such as those offered by AAA or Sam’s Club. Throughout the process, the focus should remain on the total cost over the life of the loan and not just the monthly payment, as longer loan terms can often hide high interest costs.
Membership-based car buying programs are useful tools for avoiding stress and sometimes securing significant savings, but they work best when combined with traditional research. The main takeaway is not to simply join a club to buy a car, but to use all the credible pricing channels available and check the calculations before signing any contract.
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Business Insider Information (1); Costco (2); WebProNews (3, 4); Kelly Blue Book (5); Experian (6); The Wall Street Journal (7); AAA (8); Sam’s Club (9); PenFed Credit Union (10)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
