How to Use a Car-Buying Service to Find Deals on New Cars
Smart car buyers know they should never pay full sticker price. But what’s the right target price? And what if you weren’t born with the haggling gene? If just the thought of doing battle with the dealer makes you want to take the bus instead, a car-buying service may be for you. We checked out a few services to see how good the deals are.
Join the club. The most popular car-buying service is Zag. Never heard of it? That’s not surprising -- it’s the company behind the affinity buying services of American Express, USAA and AAA, among others. The service is free (or a free membership perk) and offers pre-negotiated prices on new cars with participating dealers. Not a customer or member of a group associated with Zag? Just go to www.zag.com.
To be certified by Zag, dealers must agree to pass on 100% of the cash incentives they get from manufacturers -- including dealer cash. Each pricing report has a link to TrueCar (Zag is owned by the company) to show you how good the price is.
The process is simple. Choose the model, trim level and options. You’ll be offered the lowest prices from three local dealers. You print a certificate with the price and take it to the dealer. We shopped for a 2012 Ford Fusion SE and found it for nearly $2,700 under invoice, including a $1,500 cash rebate. (Deals on used cars are available through many affinity groups that use Zag’s system, too.)
Costco offers its members a buying service, but it’s less transparent than the Zag services. Logging on to www.costcoauto.com and entering your membership number will get you access to dealers with pre-negotiated member prices, but the prices aren’t available online. Getting the member price from the dealer was also difficult, but a Costco spokesman told us that the Fusion SE would sell for $500 below invoice. That didn’t include the $1,500 cash rebate (rebates have to be factored in separately).
Keep in mind that dealers pay a fee to affinity and club programs such as Zag and Costco for the business. There are lots of similar services out there, but ask a few questions before you sign on. Does the service state its best deal in addition to the invoice price and the sticker price? Does the price include all the options you want? What about fees? Taxes, tags and title fees probably won’t be included, but document fees and regional advertising fees should be. No matter what service you use, run a report on the model you want at TrueCar.com to see its assessment of a good (and great) price.
Negotiators for hire. Clubs that offer group discounts and accept dealer fees may not land you the lowest price. The best prices often come from services that will do the haggling for you for a fee.
One of the least expensive negotiating services is CarBargains, the buying service of the nonprofit Consumers’ Checkbook organization. For $200, it will get bids on the model with the options you want from five local dealers, asking them to compete against one another. You get a detailed pricing report from each dealer and can go to any of them to purchase your vehicle, but you’re under no obligation to buy. CarBargains shops for Kiplinger's Best New models each year and routinely gets prices at or under invoice on redesigns and brand-new models.
Authority Auto is the Cadillac of buying services. It charges $595 to $1,195, based on the price of the car. But in addition to finding the car and negotiating the price, Authority reviews the contract and even delivers the vehicle to you. The service also negotiates each part of the transaction -- dealer-installed options, the price of your trade-in, the financing and extended warranties. If you have done the haggling yourself but are not sure you’ve gotten the best price, Authority will take a crack at getting a better deal. If it can, you split the difference; if it can’t, you pay nothing.