How do car-buying services work?

Three women sitting on the back of a truck, looking at a mapImage: Three women sitting on the back of a truck, looking at a map

In a Nutshell

Car-buying services can help you purchase or lease a new or used car. If you don’t want to haggle for your next vehicle, a car-buying service could be worthwhile. But every company offers different services and has varying costs, so it’s important to do your homework beforehand.

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If you dread going to the dealer to haggle over your next car purchase, it may be worthwhile to explore a car-buying service.

Buying a car can be stressful — it’s a big purchase. Some car-buying services can allow you to bypass the dealership altogether, since you’re able to browse new and used vehicles online and find a car that fits your needs and price range. Some car-buying services even say they can help customers save money.

If you’re ready to outsource the task of searching for your next vehicle, a car-buying service could be a good option. Let’s review how this service works, how much you might pay and what potential issues to watch for.



What is a car-buying service?

Car-buying services can come in several forms and are also sometimes called car concierges or car brokers. Let’s review two types of car-buying services you might come across.

1. Membership and customer programs

You may already have access to a car-buying service through a membership with companies such as AAA, Costco or Consumer Reports. Your bank or credit union may also offer a car-buying service. For example, Chase has a partnership with TrueCar, a large car-buying service that partners with a number of highly recommended lenders and other companies.

Some of these companies often offer prearranged pricing through their online portals, so you’ll know the price of the car without having to negotiate once you arrive at the dealership.

Remember that you’ll still have to pay other fees that come along with buying a car, like taxes and registration fees.

2. Car concierges

An auto broker or car concierge is a service that helps you find a car and negotiate the price, usually promising to save you time and money.

Companies like CarBargains or Authority Auto will shop for a car based on your preferences and negotiate your car price directly with the dealership for you — for a fee that can range from a couple hundred of dollars to more than $1,000.

By working with an auto broker or concierge, you may benefit from its industry knowledge and experience. But while a company like this may get you a deal, it’s important to know that some brokers receive compensation from dealerships — making it important to do some of your own research to make sure you’re getting a good deal.

How much does a car-buying service cost?

Because there are different types of car-buying services, prices are wide-ranging, even costing up to $1,000 or more. Here’s a breakdown of what you might see from each type of service.

  • Membership programs: These programs, which are offered by companies such as Costco and USAA, are generally for members or existing customers only. And a car-buying service is usually an additional benefit that’s part of your membership — depending on the company. But you may be paying for a service, such as AAA, so it’s important to remember that these are baked into your membership costs.
  • Car concierges: If you prefer more help throughout the car-buying process, you can opt for a car concierge service. But be aware: These services, which can start around $200, can cost over $1,000. Some concierges charge a percentage of the amount they save you during negotiations. That amount will depend on the type of car and whether it’s new or used.

Is a car-buying service right for you?

If you’re still on the fence about using a car-buying service, here are some pros and cons to consider.

Benefits of car-buying services

  • You may get a better deal on new or used cars: There’s a reason people use car-buying services: the possibility of getting a good deal on a car. For instance, Regions Bank claims its car-buying service — which is powered by TrueCar — saves customers an average of $3,342 off the MSRP of a new car.
  • You can skip the headache of negotiating: If you don’t like dealing with car salespeople, car-buying services can leverage experts to negotiate for you.
  • You can save time by outsourcing the process: If you don’t want to do all the research on your own, and want some help reviewing paperwork and haggling — some car-buying services are willing to do it all for you.

Drawbacks to car-buying services

  • Buying a car online can be limiting: If you buy a car online, you may not get the exact new or used car you’re looking for.
  • Car concierges can be expensive: Some companies ask for an upfront fee and a second payment once the deal is complete. This can take a big bite from your overall savings.
  • You could do it yourself: If you have the time and desire to do it yourself, you might be able to negotiate an even better deal for yourself. Websites like Kelley Blue Book, NADAguides and Edmunds can make buying a new or used vehicle more transparent with pricing tools.

Next steps

If you’re in the market for a new car, decide how much time and effort you want to devote to research and negotiations. You can then explore if any of your current memberships or financial institutions already offer a car-buying service before deciding if it’s the right solution for you.

Even if you go forward with a car-buying service, you’ll probably still want to do some of your own research to make sure you’re getting a good deal, along with following some best practices, like taking the car for a test drive before you sign a contract. And you’ll still be in charge of applying for an auto loan if you need financing to buy the car.


About the author: Kate Dore is a Nashville-based personal finance writer and Candidate for CERTIFIED FINANCIAL PLANNER<s… Read more.