My American Express Car Buying Service Experience: Amex vs. Carsdirect.com and Costco
So recently I was in the market for a new car. Now, I know that many will argue the merits of only buying used cars because of the steep and immediate depreciation hit you take the minute you leave the lot with a new car. Well, in general, I prefer to buy new because I don’t trust my ability to evaluate the mechanical condition of a used car. Plus, it’s just a lot easier to comparison shop for new cars. I also keep my cars for a long time, so the depreciation is less of an issue.
Another problem I face when buying a car is that I hate haggling. Personally, I’d rather pay a slight premium for a more convenient transaction. Which is why I decided to explore the subject of this post: a review and comparison of a few of the “no-haggle” price car purchase programs on the market.
The most established online program seems to be from Carsdirect.com. On their website, you select the make, model and options you want and they will quote you a price. For the car I had picked (a 2010 model), they quoted me a price that was $800 below MSRP but roughly $2600 above invoice, excluding incentives. You could then get another offer from a dealer by filling out your contact information, but since this initial price they gave me was pretty bad, I didn’t bother.
Costco Auto Program
Since I’m a member, I decided to try the Costco car buying program next. After specifying the details of the car I was interested in and supplying my contact information, Costco matched me with a local dealer that participates in their program. The dealer quickly got in touch with me to set up an appointment, but claimed it was their policy to not give prices over the phone. Once I got into the dealership, the price I was quoted was about $1150 over invoice. The price, however, didn’t seem firm and was subject to negotiation. Not ready to make a decision at that point, I decided to do some more legwork.
Amex Auto Purchasing Program
It was by complete accident that I discovered that American Express also had its own car purchasing program. The service is actually run by a company called Zag. Zag partners with a number of brands and organizations, such as USAA, Capital One, and Amex, among others, to provide its service to members of the participating groups.
The online interface for Amex’s program seemed an immediate improvement over the others I had tried so far. You can configure your car with the options you want and get prices from multiple participating dealerships (relative to invoice) without entering your contact information. Based solely on zip code, I was matched with 3 dealerships, and among them, the best price was for $400 above invoice.
Thinking that this sounded pretty good but slightly skeptical that I might be missing something, I called up the Amex car buying people who assured me that the dealer was obligated to give me this pricing and there weren’t any hidden gotchas. If the dealer didn’t have the exact car configured the way I wanted, they would still honor the price, relative to invoice, of other cars they did have in stock.
Once I had filled in my contact details, the dealer quickly got in touch with me. They, of course, wanted me to come into the dealership, but I saw no point unless I was ready to do a deal. I was initially surprised that they made no mention of the car buying program. Instead, it seemed like I was a normal customer who had contacted them through their web site. What ended up happening was we negotiated a price over the phone. Eventually I was offered a price of $750 under invoice (even before manufacturer rebates and incentives). Based on what I had been reading on the Edmunds.com forums, this was an excellent price and a good deal for this car right now.
Were there any surprises? Not really. When I showed up at the dealership, the itemized invoice they showed me was roughly $550 more than the Edmunds invoice number since it included local advertising and marketing fees. Either way, I felt it was still a fair deal.
One of the other side benefits of the American Express program is that dealers are obligated to allow you to charge a minimum of $2,000 of the purchase price to your credit card. In my case, I felt like I was getting a good enough of a deal as it was, so I didn’t push for it.
There’s still a lot of haggling involved, even when using these so-called “no-haggle” services, if you’re interested in getting the best deal. Then again, getting the absolute best deal is not really the point of these services. They are more about getting a fair deal with a minimum of fuss. For the more ambitious, they can be used as a starting point for negotiating with other dealers.
Are my results typical? I’m guessing not. The end result is probably mostly dependent the particular dealer(s) that you are referred to.
I personally liked the Amex program because it allowed me to get quotes from multiple dealers up front without commitment or even entering any personal data. Assuming it’s still around in the future, I wouldn’t hesitate to use it again.