Car buying services can save you money on the overall purchase price of a car, often for a flat fee or a percentage of the savings under the MSRP. According to Bankrate, “These companies usually hire auto-savvy professionals to find a vehicle on the consumer's behalf.” The best auto buying services have the potential to save you thousands on the cost of a car. But more importantly for some buyers, a car buying service can save you time – hours and even days. If that sounds appealing to you, you might be a great candidate for a car buying service. Let’s take a look at the major types of car buying services and the differences between them to find out which is the best car buying service for you.
Club- or bank-based buying services are the simplest level of car buying service. They save you time on researching vehicles, pricing the model you like and finding a reasonable trade-in value for your current car. These are usually free services provided to members of discount retail clubs, credit unions and auto clubs like AAA, Costco and the USAA for military families.
They pre-shop a variety of dealers and makes and often have a ready pool of car dealerships and zero-haggling prices at their disposal, usually well under MSRP. In addition, they may provide extra assurance that you’re getting as many discounts as possible. Costco, for example, ensures that you receive “all available national manufacturer incentives” that you might have missed by shopping on your own. Some services only offer information and location of the car you want, along with guaranteed pricing, while others offer the help of on-site staff ready to smooth the road for you when the time comes to make the purchase. In return for the increased sales volume, dealerships usually pay a fee to the car buying service.
What To Watch for:
If you’re willing to put some cash on the table, you could save thousands over the club service's best price. Jessica L. Anderson reports for Kiplinger, “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.” These car buying services can include small local providers who understand your city and know the dealers, but the biggest fish in the market today are web-based services such as CarBargains and Authority Auto.
CarBargains, for example, charges a set fee and then takes on the task of pitting local auto dealers against each other, asking them to undercut the next dealer’s bid on the price of the car you want. Once the price hits bottom, you get to sign and drive, sometimes at a cost thousands under invoice. Some of these service providers charge a percentage of the savings they net you, while others work for a predetermined fee based on the price of the car you like.
What To Watch for:
Most services that fly the brokerage banner are on the payrolls of the dealerships, but that doesn’t mean they can't help you. A broker can save you time and hassle by finding the car you want and working out a discounted price for you. A broker may even deliver the car and contract right to your door.
Much like the club car buying services, they usually have pricing worked out in advance with local dealerships and can sometimes get prices and discounts you might not be willing or able to work out on your own. But according to Edmunds.com, they may be limited to only a few dealerships, which shortens the list of available vehicles considerably. Car dealerships pay brokers for their services because they drive sales and bring in new clientele with a minimum of negotiation time.
What To Watch for:
If you’re looking for a luxury or rare collector car or even a lease, a car buying concierge can work miracles for you. Concierges offer the best car buying service options among car buying service providers. According to Kiplinger, in some cases, they will locate the car, negotiate the lowest price, get a good offer for your trade-in, drop off the trade-in, deliver the new car and even bring the paperwork for you to sign at your office or home.
With the right car buying concierge, you might get your new car without ever setting foot outside your home. Of course, these services come at a premium, but the savings and convenience they provide net you a wide margin of profit, in most cases.
What To Watch for:
You need to take a few steps before getting the help of an auto buying service. Financial adviser Stacy Johnson offers a few tips on how to prepare for a successful purchase:
Many car owners don't know that they got a bum deal on their car insurance, because they only shopped a couple of insurance providers, or they stuck with the one their dad signed them up with when they first started driving. The best way to get a killer deal on car insurance is to talk to an independent agent, somebody who doesn't just work for some big insurance company.
Independent insurance agents are like insurance concierges. You tell them a little about who you are and what you need, and then they shop a wide range of insurance providers to find the best coverage at the best possible price. All you have to do is find one nearby and set up a time to chat. Agents in the Trusted Choice network are located in just about every ZIP code in the US. And a bonus: They stick with you, so if you have to file a claim, you've got a familiar face right there to advocate for you with the insurance company. Great deal.
Car buying services flew under the radar as an option for most car buyers in recent decades. But now this consumer service business is growing in popularity and visibility each year, as the Internet makes it easier to find and rate both car dealers and car buying service providers. This time, with a little research and a few phone calls, you might have the most laid-back car shopping experience of your life.