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The Problem with Car Buying Services

You may have heard of car buying services such as the Costco Auto Program, USAA, or CarsDirect - and you may be wondering if these are any good.

In some cases they can be, but if you're willing to spend some time getting competitive quotes from multiple dealers, you'll usually be able to beat these prices by at least several hundred dollars.

The major problem with most of the car buying services is that they don't really make dealers compete for your business.

It's more like a referral program where all car buyers within a certain location are directed to one exclusive dealer. This dealer agrees to a pre-negotiated price (which is usually pretty fair), but they also have to pay a commision to the car buying service - usually between $250 and $500 per vehicle sold.

Another thing you need to watch out for are the extra fees that might be charged with these services. Some don't list dealer add-on fees or the dealer doc fees, which could add several hundred dollars to the price of the car - and you won't know about it until you get to the dealership.

Some dealers may also try to change the price once you show up to the dealership, or they may tell you the car you wanted is no longer available. They know you've driven far and are ready to buy - and they try to pull a fast one on you.

But even with these drawbacks, car buying services are not a bad idea for someone who wants a fair price but doesn't want to spend ANY time researching or negotiating with a dealer.

However, since you're reading this site, we're assuming you won't be happy with just a fair price. You want the BEST price possible, and the only way to achive this is to use our step by step car buying method.

If you do use a car buying service, I recommend you use their price as a starting point. Shop it around to other dealers and see if they can beat it - which in many cases they will since they won't have to pay the $250 to $500 commission.

The two auto buying services I recommend are CarWoo and TrueCar.

My Recommendation for Car Shoppers

TrueCar No-Haggle and Edmunds Price Promise are the quickest way to see the lowest car prices in your area. These sites show you no-haggle prices from dealers closest to you - and the deals are usually really good. This should be the first step you take when negotiating your car price. Follow this up with my checklist to make sure you squeeze out every last bit of savings.
- Gregg Fidan

Gregg Fidan

About: Gregg Fidan

Gregg Fidan + is the founder of RealCarTips. After being ripped off on his first car purchase, he devoted several years to figuring out the best ways to avoid scams and negotiate the best car deals. He has written hundreds of articles on the subject of car buying and taught thousands of car shoppers how to get the best deals.

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