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Buying used can save you money. Buying a certified pre-owned vehicle can provide added peace of mind, but are they worth the extra expense?
Consumer Confidence
Buying a used car can be a tricky, double-edge sword kind of endeavor. The chance to save significant amounts of money compared to a brand-new car comes up against the unknown quantities of wear and tear, age, and aging technology that come with a used car. Buying a certified pre-owned (CPO) vehicle can allay many of those concerns.
But what exactly does CPO mean beyond the acronym? Typically, a certified pre-owned vehicle is a lightly used vehicle that has been inspected and reconditioned by a factory-trained mechanic at a franchise dealership. Most CPO programs tout between 100 and 300 points of inspection, depending on the manufacturer. From there, the vehicle will have been properly sorted with any existing problems addressed and then be given a manufacturer-certification.
CPO vehicles tend to be between two and five years old and carry anywhere form 20,000-50,000 miles, though this too varies by manufacturer. At any rate, usually only the best condition lease returns and trade-ins are considered for CPO status. This is one of the major appeals of a CPO vehicle, they come pre-vetted as a better than average used car.
Additionally, CPO vehicles will come with some kind of warranty. Depending on the CPO program, this will either include a simple limited warranty or both a limited and a powertrain warranty. Some programs will simply extend the original warranty, counting from the original sale date of the vehicle up to the target age/mileage. Others will begin from the CPO purchase date. Make sure you’re clear on what kind of coverage you’re getting and for how long.
Why Buy Certified Pre-Owned?
So why should you consider a CPO vehicle? First, compared to a new vehicle you’ll be saving a considerable amount of money. Over its first three years on the road, the average vehicle stands to lose nearly forty percent of its value. Buying a used CPO vehicle means you’ll dodge that depreciation bullet.
Second, compared to other used vehicles, a CPO vehicle will be, on average, in better condition and have been thoroughly inspected by a factory-trained mechanic. Any mechanical issues the vehicle may have had will have been fixed to manufacturer specifications. For many used car buyers, that degree of peace of mind is hard to come by.
And third, many CPO programs offer not just additional warranty coverage but other perks like roadside assistance, rental allowances, and even trip-interruption insurance.
Cautions to Consider with CPO Vehicles
There are, however, some other things to consider with a CPO vehicle. Be aware that there is a significant difference between a “dealer-certified” used car and a manufacturer-certified used car. The latter is backed by the OEM (Original Equipment Manufacturer) and the former is just the dealer putting his/her/their stamp of approval on their own inventory.
CPO vehicles also tend to carry a price premium over other non-certified used cars. This disparity averages out to roughly $1,500 dollars. Taking into consideration the warranty coverage (if any) that is being offered as part of your CPO deal, it be just as reasonable financially to consider getting an extended manufacturer warranty on a non-certified used car. This will obviously vary based on a case-by-case basis.
Another consideration is scarcity. Even before the pandemic related crunch in used car supplies, CPO vehicles represented a fraction of the overall used car market. The best condition trade-ins and lease returns continue to be rare and as a result, buyers are often limited on choice. This means compromising on things like trim levels, must-have features, and even your desired paint color.
Key Takeaways for Certified Pre-Owned Vehicles
CPO, or certified pre-owned, vehicles offer an attractive alternative to both new and traditional used vehicles. Dodging depreciation and saving a hefty chunk of money while also having the peace of mind that the vehicle is mechanically sound goes a long way toward assuaging used car anxieties.
And yet, you’ll want to carefully read any and all warranty information and weigh whether paying the premium that comes with the CPO label is worth it to you. For many, the peace of mind and confidence that comes with a manufacturer backed inspection certification is well worth the extra dollars up front.
