How Does The Costco Car Lease Program Work?

Leasing a car is kind of like a middle ground between renting and buying.

When you buy a car outright, the car is yours (even if you’re still making payments on it). After the car is paid off, it’s your responsibility to maintain it or sell it.

When you rent a car, you often pay a very high premium per day, week, or month to use the vehicle. You do not own any equity in the vehicle, but you also don’t have to worry about paying for basic maintenance.

With leasing a car, these two ideas merge…

When you lease a car, you don’t have to make a down payment, but you might be asked to pay a refundable security deposit up front. You also have to make monthly payments to cover depreciation and the rental service itself, but these payments are typically much lower than the monthly payments you would owe on a loan for a new vehicle purchase.

Through the Costco Auto Program, car leasing periods typically last between two and four years. At the end of this period, you will be charged the portion of the value of the car that you “used” during your lease period.

The way this is calculated works like this…

If a car is valued at $30k when you lease it as a new vehicle, but then the value of the car drops to $16k by the time your lease period is over, you will then owe $14k to the Costco Auto Program (plus interest and tax) at the end of your leasing period.

While you might be wondering why anyone would lease a car instead of just buying one, there’s actually a pretty good explanation.

Leasing a vehicle can be a great way to reduce your monthly and overall vehicle costs. You’re never charged a downpayment, your monthly payments are lower, you don’t have to worry about selling your vehicle at the end of your lease, and you don’t have to worry about major repairs. All of these can add up to saving you a ton of money.

To read the full description of low leasing differs from buying and how you can save a leaser with the Costco Auto Program, click here.

How To Lease A Car From Costco?

To get started in the process of leasing a car from Costco, you’ll have to go through the process of searching for a car to purchase. It might sound counterintuitive, but Costco’s leasing program is linked to its car sales program.

To find a car to lease from Costco, follow these steps…

Visit the Costco Auto Program website
On the right side of the page, select either “new vehicle search” or “pre-owned vehicles” depending on your preference
From there, you will be asked to enter your zip code as well as some information about the type of vehicle you’re interested in
Continue following the prompts until you find the car for you
Click “locate dealer” on the right side of the page
You will then be asked to enter your name, contact information, and Costco membership information
Once you have submitted this, you will be connected with a dealer who can provide you with a quote for both purchasing and/or leasing the vehicle

It’s important to remember that the Costco Auto Program is essentially just a search tool that allows you access to promotional pricing. Costco does not actually facilitate the terms of your lease. If you decide to lease a vehicle you found through Costco, the terms will be set by the dealership you work with.

How Much Does It Cost To Lease A Car?

The cost of leasing a car through the Costco Auto Program (or any other car leasing program) depends on the make, model and trim level of the vehicle you choose as well as on the terms and duration of your lease. Most leasing periods last between 24 and 48 months, and the longer your lease period, the more you will be expected to pay when your lease is over.

At the end of the day, the individual costs involved with leasing a car include:

The portion of the car’s value you “used” during your leasing period (the amount the car’s value depreciated while you were using it)
Interest and taxes on that amount
A security deposit
A monthly service fee

Depending on the dealership you lease through, there may be some other minor costs associated with leasing as well.

To find out exactly how much it costs to lease a car through the Costco Auto Program, you will need to contact a dealership directly and receive a Members Only pricing offer.

Does The Costco Auto Program Really Save You Money?

Depending on your situation, leasing a car through the Costco Auto Program could certainly save you money.

Costco members receive members-only prices on new vehicles, whether you’re buying or leasing. You can also receive 15% on replacement parts and up to $500 off on services at eligible repair centers across the US.

When you lease a car, you also save on monthly payments, the initial down payment, and the hassle of having to sell your car when you’re done using it.

The Costco Auto Program service itself does not cost anything to use (beyond the cost of your Costco membership).

If you’re someone who loves the idea of driving a new car but wants to do it in the least expensive way possible, then leasing through the Costco Auto Program can definitely save you money.

According to information provided by Capital One, the prices Costco members receive on new vehicles are typically about $1000 less than market prices.

Costco Car Lease Program Reviews

Due to the unstable state of the current car market, it turns out that now might not actually be the best time to try to save money with the Costco Auto Program.

As some Costco members have pointed out online, the dealerships that work with the Costco Auto Program are struggling with inventory and hiking up prices as a result…

If you’re really trying to save money, some commenters have shared that despite Costco stating that their Auto Program prices are fixed, haggling is sometimes possible as long as you’re willing to roll up your sleeves a bit…

Here are even more voices weighing in to say that in the current car market, the Costco Auto Program really isn’t all it’s cracked up to be…

Alternatives To The Costco Auto Program

If you’re looking for an alternative to the Costco Auto Program, try these other online car buying, selling, and leasing services instead…

TrueCar
Cars Direct
Kelley Blue Book
FairLease
Autopia

Despite some misleading information online, popular companies like Carvana, Vroom, and CarMax do not lease cars at this time.

FAQs

Can you haggle with the Costco Auto Program?

Not usually. The quotes you receive through the Costco Auto Program are considered fixed and cannot be negotiated. Remember that these prices are already significantly lower than what would be offered to the general public.

Do you get 2% cash back with the Costco Auto program?

Yes, but only if you purchase your car with your Costco Anywhere Visa. The standard 2% cash back rewards afforded to Executive Costco Members do not apply to purchases made through the Costco Auto Program. These cash back rewards are also capped at $1000 per year.

Does Costco membership cover car rentals?

No. Costco members can receive discounts and special promotions on car rentals through Costco Travel. However, the cost of your membership does not pay for car rentals.