Buying a Certified Pre-Owned Used Car Through Costco

Costco has a certified pre-owned program for used cars that could be worth the price of membership to the warehouse club.

Let's take a look at how the program works and why it's a good program for consumers to be involved in. The first thing you do is choose a factory-certified pre-owned vehicle and locate a participating dealer. Within 24 hours, an authorized dealer contact from the participating dealership will contact you to schedule an appointment. You will also be given the authorized contact's information if it is more convenient for you to contact them.

It makes car buying so much easier when there is only one person at a dealership to interact with and that person is familiar with what you are seeking. That's why it's always best to start your used car buying process online when possible. Walking in cold to a dealership is always a bad idea because it's an inefficient use of your time.

Your next step is to meet with the dealer representative. He or she will help you select a factory-certified pre-owned vehicle.

Costco Dealer Representative

Before proceeding further, it's important to define what a factory-certified pre-owned vehicle is and why it's important only to buy one. It's a vehicle that has been inspected to manufacturer standards and is backed by the manufacturer. Its warranty can be used at any franchised dealership in the country that sells the same model vehicle.

Don't confuse with programs, like the Motor Trend certified pre-owned. That's actually an insurance policy that has restrictions and not lots of mobility to it. Dealerships that sell certified pre-owned cars from outside their franchise are basically selling you an insurance policy that usually has a deductible and difficult restrictions.

Just to further confuse things, Volkswagen is one manufacturer that sells certified pre-owned used cars it does not make. For example, buying a certified pre-owned 2013 Chevrolet Malibu at a VW dealership means you are buying an insurance policy as part of its VW World Auto program.

Costco Auto Program Document

Once you meet with the dealer representative, you will be presented with a member-only price sheet. It's the Costco Auto Program document at the dealership that shows the savings prearranged for Costco members for every vehicle the dealership offers through the program. After selecting a vehicle at the dealership, members should ask the authorized dealer contact to prepare a vehicle-specific price for that vehicle.

Having done your homework on the used car value before even walking in the door, you should be able to determine quickly if this is a good price offer. After all, you're under no obligation to buy from the dealer. You can simply end the purchase process at this point if the price is not competitive with the research you have done.

According to the Costco website, "Pricing is predetermined on the vehicle you select and may represent either mid-to-low Kelley Blue Book values or a preset discount off the dealer's lowest posted price on that vehicle." With regards to the latter point, look up what price the dealer is offering the vehicle you are interested in and make sure the savings are significant. For example, knocking $100 off the price of a $20,000 car isn't really that significant.

Things get a little trickier with the KBB.com value. KBB.com values tend to run a little bit higher. However, make sure the price being offered is closer to the dealership price than the certified pre-owned price. KBB.com will list a private sale value, a dealer value, and a certified pre-owned value. Look at the dealer value for a vehicle in excellent shape because most certified pre-owned vehicles are usually at the top of their game.

You Can Still Negotiate

That's the price you're going to target under the Costco program. Something else important to remember is you can still negotiate the price further if you want. The vehicle-specific price is also valuable because you should always buy a used vehicle based on price and not monthly payments. It works out better in the long run and makes for a less confusing, ultimately more expensive, buying process for you as a consumer.

There's an added benefit to buying from the Costco program. If you purchase a factory-certified pre-owned vehicle from one of its participating dealers you can receive a special benefit as a Costco member. It's a member voucher good toward parts, service, and accessories at the dealership where the vehicle was purchased. It's a $100 voucher for Gold Star/Business Members and $200 voucher for Executive Members. Of course, there is fine print associated with the voucher but it appears not to be insurmountable. You can read all about it at the Costco certified pre-owned website.