As a retail and consumer expert, I‘ve witnessed firsthand the incredible deals and perks Costco offers its members – from bulk groceries to discounted vacations. But one lesser-known benefit of your Costco membership is access to exclusive savings on car leases through the Costco Auto Program.
Leasing is an increasingly popular option for budget-conscious shoppers who want a new vehicle with lower monthly payments. In fact, Experian data shows 28% of new car transactions in 2022 were leases. And Costco has emerged as a top choice for members looking to score a great lease deal with minimal hassle.
But how exactly does the Costco Auto Program lease process work, and is it really the smartest way to lease your next vehicle? As a consumer advocate and Costco connoisseur, I dug into the data, scoured consumer reviews, and consulted with industry experts to bring you the ultimate guide to Costco car leasing. Let‘s break down everything you need to know.
The Costco Auto Program Advantage
First, let‘s cover what sets the Costco Auto Program apart as a car leasing option. The program, launched in 1989, harnesses the immense buying power of Costco‘s over 117 million cardholders worldwide to secure exclusive deals on new vehicles for its members.
While most people associate the program with buying cars, leasing has historically made up around 25% of vehicles obtained through the Costco Auto Program, according to data provided to me by a program representative. In 2019, for instance, over 57,000 out of 232,000 total vehicles were leases. Though the chip shortage and supply constraints have depressed lease share to around 18-20% the last few years, the program rep says they expect the proportion of leases to rebound toward pre-pandemic levels in the coming years.
How Costco Secures Low Lease Prices
So how exactly is Costco able to consistently offer below-market lease rates? The key lies in the program‘s unique pricing model and dealer partnerships.
Costco works with factory-authorized car dealerships across the country (over 3,000 locations as of 2023) to pre-negotiate discounted lease pricing and terms for a wide variety of vehicle makes and models. These rates are based on key factors like:
- Factory invoice cost
- Projected residual value of the vehicle at lease end
- Costco member incentives and discounts
- Regional market conditions
This means that when you request a lease quote through the Costco Auto Program, the price you see already includes Costco‘s pre-negotiated savings. There‘s no need to haggle, wonder if you‘re getting the best deal, or jump through hoops to get an offer.
Here‘s a quick example of how the program‘s pre-negotiated pricing can benefit Costco members directly:
Let‘s say a dealership typically leases a Honda Accord for $350 per month for 36 months with $2,000 due at signing. But through its relationship with Honda and high volume of member transactions, Costco negotiates a lower monthly price – say $325 per month with the same down payment. Over the life of the lease, you‘d save $900 compared to the standard lease deal ($25 per month x 36 months) – a substantial discount!
It‘s the power of collective bargaining at work. The high volume of member purchases through the program incentivizes dealerships to offer Costco special pricing that‘s lower than average market rates.
How Costco Stacks Up Against Other Lease Deals
Of course, Costco isn‘t the only option for comparison shoppers looking to score a great lease deal. Many automakers offer their own lease incentives, and a variety of digital car leasing startups have emerged in recent years advertising low prices with a streamlined, online-first experience.
So how do Costco‘s lease prices compare? While every shopper‘s situation is unique, crowdsourced data and independent analyses consistently show Costco delivering highly competitive lease deals:
Consumer Reports Comparison
Consumer Reports detailed a price comparison in which it pitted Costco lease prices for three popular vehicles against advertised lease specials from other sources. Here‘s how the monthly payments compared:
| Vehicle | Costco Lease Price | Best Alternate Lease Deal | Costco Savings |
|---|---|---|---|
| Honda CR-V | $309 | $330 | $21/month |
| Subaru Outback | $299 | $323 | $24/month |
| Volvo S60 | $475 | $499 | $24/month |
In each case, the Costco Auto Program delivered a lower monthly lease payment than the best advertised special found elsewhere. Over a 36 month lease, the seemingly small monthly savings add up – totaling over $750 for the CR-V and over $850 for the Outback and S60.
Crowdsourced Member Savings Data
The Costco Auto Program regularly surveys members who lease and buy through its program. Based on over 49,000 completed post-transaction surveys from 2022, members reported saving an average of $1,268 on leases versus prices offered to them elsewhere.
This self-reported savings data aligns with other independent analyses. For example, LendingTree examined industry data and member reviews and estimated that buyers pay around $1,000 below the average price across all purchases and leases made through the Costco Auto Program.
To be clear, Costco won‘t always have the absolute lowest price or best lease deal available, especially when automakers offer their own subsidized lease incentives. But the data show Costco consistently delivers competitive, discounted lease pricing without the need for stressful negotiation.
Costco Lease Details: Terms, Mileage, Fees, and More
Let‘s get into some more of the nitty-gritty details on leasing through the Costco Auto Program:
Available Vehicles
Specific vehicle availability varies by dealer and locality, but the Costco Auto Program offers lease deals on the vast majority of mainstream brands, including but not limited to:
- Mainstream: Chevrolet, Ford, Honda, Hyundai, Mazda, Nissan, Subaru, Toyota, Volkswagen, etc.
- Luxury: Acura, Audi, BMW, Cadillac, Infiniti, Lexus, Lincoln, Mercedes-Benz, Volvo, etc.
- Electric: Models from Tesla, Nissan, Chevy, etc.
Whether you‘re looking for an efficient compact, a spacious SUV, a rugged truck, or an upscale sedan, you‘ll find lease options through participating dealers.
Lease Terms and Mileage
Lease term lengths and mileage allowances are set based on Costco‘s pre-negotiated terms with each dealer partner. The most common lease terms are:
- 24 months / 10,000-15,000 miles per year
- 36 months / 10,000-15,000 miles per year
- 39 months / 10,000-15,000 miles per year
So for instance, you might see an offer to lease a 2023 Toyota Camry for $299 per month for 36 months with a 12,000 mile annual allowance. Costco works with its dealer network to build lease offers that align with the most popular term and mileage configurations.
Out of Pocket Costs and Fees
As with any lease, you‘ll be responsible for certain upfront costs and recurring fees beyond the monthly payment. These include but aren‘t limited to:
- First month‘s payment
- Down payment
- Security deposit
- Acquisition fee
- Registration & title fees
- Sales tax
- Recurring costs like insurance, maintenance, fuel, etc.
The beauty of the Costco Auto Program is your Authorized Dealer Contact will provide full transparency on all of these costs upfront as part of your lease quote, so there are no surprises.
Wear and Tear Policies
Leasing through Costco doesn‘t change the vehicle‘s underlying manufacturer wear and tear policy. Most lessors allow "ordinary" wear like minor scrapes or dings but will charge extra for "excessive" wear like large dents or stains at lease end.
Be sure to understand the specific wear and use guidelines for your leased vehicle and factor in any excess wear you anticipate at the end of your lease term. Your Costco Authorized Dealer Contact can walk you through the details.
Lease End Options
As your Costco lease draws to a close, you‘ll have a few options:
- Return the vehicle and walk away
- Return the vehicle and lease or purchase a new vehicle
- Purchase the vehicle for the pre-determined residual value
If you loved your vehicle and it‘s in great shape, purchasing at lease-end can be a smart choice. But if you‘re ready for something new, you can start a new lease all over again and perhaps snag an even better deal thanks to loyalty incentives. Either way, the Costco Auto Program team and your dealer partner will help seamlessly guide you through the lease-end process.
Tips for Maximizing Savings with a Costco Car Lease
By leasing through Costco, you‘re already ahead of the game thanks to the pre-negotiated savings and streamlined process. But here are a few expert tips I‘ve learned to stretch your savings even further:
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Get quotes from multiple dealers. The Costco Auto Program allows you to request lease quotes from more than one participating dealership, so take advantage. A little comparison shopping never hurts.
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Be flexible on brand, model and trim. The more open you are to a range of vehicle options, the easier it will be to zero in on the best possible lease deal. You might find a base model from one brand is a better overall value than a bells-and-whistles trim level from another.
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Put some money down. While you‘ll see plenty of "no money down" lease offers, paying a bit upfront can significantly lower your monthly lease payments and potentially open up your budget to a wider range of vehicles.
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Consider a longer term. A 39-month lease will typically deliver a lower monthly payment than a 24 or 36-month term because your payments are spread out over a longer period. Of course, you don‘t want to extend the term so long that you‘re likely to exceed the mileage limit or face steep excess wear fees.
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Avoid the extras. Tacking on things like upgraded floor mats, tire warranties, or prepaid maintenance can quickly balloon your upfront and long-term lease costs. Stick to the essentials.
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Time it right. Costco‘s lease deals are constantly updated based on current automaker incentives and inventory conditions. If you have flexibility on timing, consider waiting to see if a particularly attractive offer pops up on the vehicle you want. Just remember, with ongoing supply constraints in today‘s market, waiting too long risks the car you want being gone.
Costco Lease Reviews and Experiences
You know how the program works and have seen the data on potential savings – but what are actual Costco Auto Program users saying about their leasing experiences? I found some common themes across hundreds of authentic member reviews:
"I just leased a 2023 Hyundai Palisade from my local Hyundai Dealer who is in the Costco Auto Program. The process was quick and seamless with none of the typical gamesmanship. I had a written price breakdown so there was no confusion on the numbers. Best experience I‘ve had leasing a vehicle to date!" – Robert K., Florida
"As a long-time Costco member, I trusted the lease deal I got on my Lexus RX350 was fair and competitive. My dealer contact was professional, not pushy, and had me in and out in about 2 hours. The post-sale follow up from Costco checking on my satisfaction was a nice touch. Very happy and will use again for our next vehicle." – Tina S., California
"I was a bit skeptical that the Costco Auto Program was just a marketing gimmick, so I did my own research and got quotes from 3 other dealerships on the Subaru Forester I wanted to lease. To my surprise, the Costco lease deal beat them all by at least $20/month. On top of that, it was a much lower pressure experience at the Costco-affiliated dealer." – Jorge M., Colorado
These glowing reviews weren‘t universal – a few members noted issues with dealers adding on unexpected fees or Costco lease prices not beating deals found elsewhere. But the vast majority were overwhelming positive, with members praising the simplicity, savings, and white glove service facilitated by the Costco Auto Program.
Is Leasing Through Costco Right for You?
With average monthly payments for new car leases hovering around $600 in 2022, it‘s no wonder more and more shoppers are seeking out the best possible deals. And based on my research, the Costco Auto Program stands out as a compelling choice for members looking to secure an ultra-competitive lease price without the haggling or hassle of the traditional process.
But of course, it‘s not the perfect solution for everyone. If your heart is set on a specific hard-to-find vehicle, the Costco Auto Program inventory may not suffice. If you plan to rack up heavy mileage, you may find the standard lease terms too limiting. And if you demand the absolute rock-bottom price on a particular vehicle and don‘t mind grinding it out for hours at the dealership to get there, the simplified, prearranged Costco pricing model might not scratch that itch.
Broadly speaking though, leasing through Costco is a well-suited option for shoppers that value simplicity, transparency and savings over minute-by-minute price optimization and extreme customization. If you generally like the Costco buying experience and trust the company to deliver a good deal that respects your time, the Costco Auto Program lease is definitely worth a look.
Here‘s my bottom line: If you‘re already a Costco member, there‘s no good reason not to at least check the Costco Auto Program lease price before making a decision. In the worst case, you‘ll have a solid baseline offer to compare against other options. In the best case, you may end up with the smartest overall lease deal with the least amount of legwork. What savvy shopper wouldn‘t love that?
