Deals on Wheels Go Beyond Dealerships

Struggling auto makers may be rolling out record-breaking cash incentives to lure in shoppers and offset flagging sales, but consumers may be able to find even better deals if they make a detour on their way to the dealership.

Warehouse clubs, banks, online retailers and membership organizations like unions and AAA offer auto-buying programs that can save car shoppers as much as 20% off the sticker price on a new car. These groups prenegotiate prices with individual dealerships -- often nabbing price tags that are at, or just slightly higher than, invoice (the amount the dealer pays the manufacturer for the car). Even better: Those discounts are before you factor in those record-high manufacturer incentives.

“I’ve always wondered why people don’t use these [auto-buying programs] more,” says Phil Reed, consumer advice editor for Edmunds.com. “They’re going to very quickly get you in the ballpark of an excellent deal.” (See the chart below for examples of just how much you’ll save compared to other car shoppers.)

Third-party negotiating services like Zag.com and Vehicle Advantage work out a deal between the dealerships and the group or company offering the auto-buying program. The dealership gains the extra business, and the other two parties get a small commission, explains Jack Nerad, executive editorial director for Kelley Blue Book. “They’re basically brokerage situations,” he says. “They put together deals and get a piece of the action for doing so.” The consumer gets the benefit of a locked-in offer without haggling or even setting foot in the dealership.

To get the best price on a new car, request estimates from a few auto-buying services to see if you can snag a better deal. There’s no credit check until you commit to doing business with the program, and estimates are free. Here’s how to ensure you get the best possible deal:

Compare prices among programs

The size of the discount you'll receive depends on the sponsoring group’s leverage with dealerships, so get free estimates from a few auto-buying programs to see which has the best deals. Just be aware that some programs, like AAA and Costco (COST) require you to be a paying member in their organization to complete the purchase, which can eat into your savings on the deal. Others, including those from Capital One (COF) and Overstock.com (OSTK), are completely free.

Shop on your own, too

Auto-buying programs aren’t always the best deal around. Due to high demand, popular vehicles like the Toyota Prius and other hybrids are rarely discounted. (Auto-buying programs at AAA and Upromise, for example, charged $582 more than the sticker price.) Some dealerships offer the special auto-buying program price instead of manufacturer incentives. Commissions -- paid to the third-party broker and the auto-buying program sponsor -- can also inflate prices. Use Edmunds.com or Kelley Blue Book to request emailed quotes from other local dealerships, to ensure that the auto-buying program’s price is actually better.

Look for perks

If you have a choice of programs and the prices quoted on the vehicle itself are pretty much the same, factor in the extras. Sam's Club’s program, for example, offers buyers 10% off parts and service for their new vehicle, as well as a warehouse club gift card of up to $500 when you purchase select models. College savings program Upromise deposits an extra $50 in your membership rewards account.

Prequalify for a loan

Most deals hinge on financing approval – not exactly a sure bet in the ongoing credit crunch, says Nerad. Get preapproved from your bank or credit union before requesting a quote through a car-buying program.

Compared to the manufacturer’s suggested retail price, here are some of the deals you can find through an auto-buying program: