You've decided to save money by purchasing a used car rather than a brand-new model. Now, there's another decision you need to make: Do you choose a traditional used vehicle or a factory-certified pre-owned car? There are pros and cons to both options. CPO cars typically cost more than non-certified cars, but they offer many of the perks of new cars, such as warranty coverage direct from their manufacturer. We’ll explore them in-depth in the following sections. Which option is best for you? Read on to find out.
What Is a Certified Pre-Owned Car?
A factory-certified pre-owned car (CPO car) is a gently used vehicle sold by a franchised new car dealer of the same brand. They're typically gently used, accident-free, low-mileage vehicles that are only a few years old. Not long ago, only luxury automakers had CPO programs. Today, nearly every automaker offers certified used vehicles, including cars, pickup trucks, SUVs, and minivans.
They’re different from other used cars in that they typically come with warranty coverage backed by their original manufacturer.
Not every car displayed on a dealer’s lot will be a certified pre-owned vehicle. While each automaker’s program has different specific requirements, CPO vehicles have to be below a certain age and mileage, have records showing they have been well-maintained, plus have the ability to pass a rigorous inspection process.
You will only find factory CPO cars at dealerships of the same brand. For example, you will only find a certified pre-owned Honda CR-V at a Honda dealer. If you see one marked “certified” on a Toyota dealer’s lot, it won’t be a factory-backed CPO vehicle.
Many of the vehicles sold through automakers’ CPO programs are lease returns. While they might not have all of the latest tech features found on new cars, they will be relatively new and come with warranties backed by the automaker, not a third party or individual dealer.
How Do Cars Become Certified?
The first step in a used vehicle’s path to becoming a CPO vehicle is meeting an automaker’s requirements for the program. While each automaker has different specific rules, all certified used cars have to be below a certain age, meet a maximum mileage limit, have a record of proper periodic maintenance, and (in most cases) have a history that is collision-free.
CPO Inspection and Refurbishment
The dealer will then inspect the vehicle and, if they elect to declare it a certified pre-owned vehicle, refurbish the car to the standard set by the CPO program. The number of inspection points advertised by various automakers differs, but it's really not important. What passing the inspection means is that the car is in good enough shape that the carmaker will provide warranty coverage for the new owner.
Non-CPO Used Car Inspections
A non-CPO vehicle may or may not be inspected by a dealer and will likely only receive enough refurbishment to make it attractive for sale. Since dealers typically don’t provide warranty coverage on non-CPO used cars, there’s no reason for them to make extensive mechanical repairs. Once you drive used cars that are not certified off the lot, any problems or mechanical breakdowns are your responsibility.
The same goes for private-party used cars. It’s buyer-beware, and you should not expect any assistance from the seller once you have signed the paperwork and assumed ownership of a pre-owned vehicle. That's why it's always important to get a non-CPO used car inspected by an independent mechanic before you buy it from either a dealership or a private party.
A significant difference between CPO and non-CPO cars is the warranty coverage you receive. In short, with a non-CPO vehicle, you won't typically get warranty coverage. With a CPO car, you will.
Non-CPO Used Car Warranties
When you buy a used car that is not certified, any problems you encounter after you leave the dealership are your problem. That is, unless there is bumper-to-bumper or powertrain limited warranty coverage left in the vehicle’s original limited warranty or you purchase an extended warranty. In a few cases, a dealer will provide an extended warranty on a non-CPO vehicle as an incentive to sell the car, but it’s not common.
Some car dealers offer certified used cars that are not backed by automakers. They can be backed by the individual dealer or simply sold with an extended warranty from a third party and advertised as "certified." Whichever the case, a non-factory-certified used car does not typically offer the same benefits as a factory-backed program, such as warranty coverage from the brand’s dealerships.
A tip-off that a certified used car is not backed by the automaker is if it is a different brand from the selling dealer. True CPO cars are only available from franchised dealers of the vehicle’s brand.
CPO Car Warranties
One of the greatest benefits buyers receive with the purchase of a certified pre-owned vehicle is warranty coverage. While different CPO programs offer varying coverage levels, all of them provide at least some coverage buyers would not typically receive with non-CPO used cars.
Unlike the bumper-to-bumper new car warranty buyers receive, CPO warranties tend to be more limited in the components they cover. Some require payment of a deductible, while others don't. The number of miles or months covered also differs by automakers. Some are based on the car's original in-service date, while others are attached to the date you purchased the CPO car or its odometer reading at that time. Buyers should look closely at the length of the warranty they will receive and what the warranty covers before they commit to a purchase.
Who Backs CPO Warranties?
Genuine factory-certified used cars are backed by their original manufacturers. Vehicles purchased through a factory program can receive warranty service at any of the brand's franchised new car dealerships. That’s a great benefit if you move to another city or want to change dealerships after you make your purchase.
How Much More Do CPO Cars Cost?
All used car prices are set by supply and demand, with newer, better-equipped, lower-mileage cars commanding higher prices than older, higher-mileage vehicles.
Certified pre-owned vehicles tend to be priced higher than non-certified cars for several reasons. First, certified used cars come with warranties that are not included on most non-certified pre-owned vehicles. They're also subject to an inspection and refurbishment process that other used vehicles don't go through. That costs the dealership money, which is included in the car's price. You can only buy factory-certified pre-owned vehicles at franchised new car dealerships, which tend to price used cars higher than independent used car lots and private-party sellers.
The amount of the price premium you can expect to pay for a certified versus non-certified used car varies greatly, but with two otherwise identical used vehicles, the certified one will have a higher price tag. According to our national pricing data, the average price of CPO cars is about 17.5% higher than non-certified models.
CPO Cars Are Still Used Cars
Even though factory-certified pre-owned trucks, SUVs, and cars go through a rigorous inspection and refurbishment process, they're still used vehicles. Buyers need to do their due diligence, and that starts with looking at a thorough vehicle history report from a company such as Carfax or AutoCheck. Many dealers will provide the report to potential buyers for free.
A CPO car will also show some wear and tear that you won’t find on a brand-new vehicle. Different manufacturers have different specifications about how much tire, brake and other wear is acceptable when a car is declared “certified.”
Additional CPO Benefits
CPO cars frequently come with additional benefits you don’t get when you buy a traditional used car.
For one, since you’re buying from a new car dealership, they can take care of all of the purchase and registration paperwork for you, which can save a lot of hassle.
Depending on the CPO program, you may also receive extras such as roadside assistance, trip interruption insurance, no-cost maintenance, and replacement transportation for those times your car is in the shop getting a covered repair. Some manufacturers give buyers a chance to return their CPO vehicles for a few days after the purchase.
As with everything in the car-buying process, you’ll want to read all of the fine print to see the terms and conditions for receiving the added benefits.
Special CPO Financing Deals
Another benefit of buying a CPO vehicle is the availability of special financing programs. With a traditional used car, buyers have to pay market interest rates. Automakers offering CPO cars, however, sometimes offer special interest rates to buyers with excellent credit. Our used car deals page shows the best financing deals currently available on a wide variety of models. Even if you can’t get a special deal from a manufacturer, many lenders treat CPO vehicles like new cars when it comes to making auto loans.
As with any car purchase, it’s a good idea to get pre-approved for financing. As part of that process, you can identify lenders willing to cut you a deal.
Where to Buy Them
You can buy non-certified used cars from a variety of sources, from private party sellers to independent used car supercenters to new car dealerships. Certified used cars are only available from a franchised new car dealership of their same brand.
If you are looking for a specific model and make of car, it is generally easier to find it on the broad, non-certified used car market. To find that same car as a CPO vehicle, you may need to cast a wide geographic net and look at dealers far from your home. Fortunately, most dealerships post their used car inventory online so that you can do your searching from the comfort of your home.
What Kind of Vehicles Can You Buy?
The idea of certified used cars was born in the luxury car market. Today, nearly every manufacturer has a CPO program, though they’re not all created equal. You can find CPO vehicles ranging from inexpensive subcompacts to sumptuous luxury cars and SUVs.
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