Looking for a way to blend the benefits of buying a new car and a used vehicle? Purchasing a certified pre-owned car (CPO car) is a way to do just that. You won’t pay anywhere near the price of a new vehicle, and you’ll get warranty protections you typically don't get with used cars.
Like any other vehicle, used or new, getting a great deal takes some work and some negotiating skill. In this guide, we’ll take you through the process of saving money on your CPO car purchase with the least amount of stress-inducing haggling.
- What Is a Certified Pre-Owned Vehicle?
- Preparation for Buying a CPO Car
- Where to Find a CPO Car
- Getting Into the Right Mindset for Negotiation
- Doing the Negotiation Dance
- Closing the Deal
To qualify for a car company’s CPO program, a vehicle must be a relatively young car, truck, SUV, or minivan with limited miles on the odometer and a history that doesn't involve major crashes. To earn a CPO designation, a vehicle must pass a rigorous certification inspection.
True CPO cars are only sold by franchised car dealers of their particular brand. They're different than non-CPO vehicles, as they are sold with warranty coverage. Many CPO programs also include extras, such as roadside assistance, service loaner cars, and trip interruption insurance.
A large percentage of CPO cars are lease return vehicles that had to be well cared for by their original drivers. Other good candidates for CPO status include vehicles that were driven by employees of their manufacturer, company cars for dealer personnel, and service loaner vehicles.
Before becoming a certified pre-owned car, a vehicle will go through a thorough inspection and reconditioning process. Because of the additional warranty and reconditioning, buyers can expect a CPO car to cost more than a non-certified used vehicle.
With any car purchase – new, used, or certified pre-owned – some preparation can make the buying process easier on your wallet.
Know Your Budget
Before you start looking at cars that may be out of your budget, it's essential to know what you can afford. Our car affordability calculator will help you set an overall car-buying budget, while our article on how much you should spend on a car can assist you in determining an affordable monthly payment.
As a prospective car-buyer, you should also check your credit score, so you know if you can qualify for a car loan and the range of interest rates you should expect to pay.
Research the Pre-Owned Car
Before you try to buy any vehicle, you want to know as much about it as possible. That includes having a good idea of its market value, condition, and history. Our used car rankings and reviews show the pluses and minuses of nearly every vehicle available in the marketplace along with the prices being asked for specific models.
Any used car purchase, including a CPO car purchase, should include getting a comprehensive vehicle history report from a company such as Carfax or AutoCheck. Some dealerships will provide a copy of the report, while others will require you to buy one on your own. The report will show the vehicle’s crash history, title history, service records, and more.
With most used car purchases, an inspection by an independent mechanic is recommended. However, that’s not as critical with a CPO vehicle, because the dealer inspects and reconditions the car, and the car’s manufacturer backs it with a warranty.
Get Preapproved Financing
A critical step in any car purchase is getting a preapproved financing offer from a bank, credit union, or other lender. While most buyers let the dealer arrange their financing, you can get a much better deal by getting a preapproved auto loan offer from a lender outside of the dealership, then using it as a bargaining chip in your purchase negotiations.
If nothing else, the process of getting a preapproved auto loan will identify any issues in your credit history and help you avoid nasty surprises in the dealer’s finance office. It’s especially critical for buyers with bad credit, or those who are in desperate need of a car, to look at financing options outside of a car dealer. Some unscrupulous dealers prey on buyers who are desperate or don’t know that they have other financing options.
Look for Deals
Another benefit CPO cars have over run-of-the-mill used vehicles is the availability of special financing deals from automakers. Getting a lower-than-market interest rate can save you hundreds or thousands of dollars over the life of your auto loan. You can find the best used car financing offers on our used car deals page.
Check the Calendar
A great way to get a good deal is to watch the calendar. Both salespeople and dealers have monthly, quarterly, and annual sales targets. Buying near the end of those periods from a salesperson or dealer that has not hit their goal gives you more negotiating power. If they have reached their goals, they won’t have the same urgency.
The old tactic of walking into a dealership just before closing time doesn't work anymore (and it never really did). They'll ask you to come back another day if they're not enthused about staying late. If they really do want to sell a car to hit goal, they'll stay as long as it takes to negotiate a mutually beneficial deal.
When shopping for a certified used vehicle, you want to cast your net wide to a number of dealers. Shopping at just one will not only limit the number of vehicles you might consider but limit your choice of deals. Shopping at multiple dealers allows you to see more available cars and pit one dealer against another to make you the best offer.
The great thing is you no longer have to drive all over town. Our car finder tool shows the cars available at dealerships in your area. You can also check each dealership’s website to see their inventory. A quick call to the dealer’s internet sales manager will let you know that the car is still available and start the negotiation process. Letting them know you are shopping at multiple dealers is acceptable – in fact, they probably expect you to be doing so.
Once you have your options down to a few choices, you’ll want to start visiting dealerships in person to put your eyes on the CPO vehicle and take test drives. A thorough test drive is an important part of any used car purchase.
Buying a car can be an emotional process. It’s easy to develop a passionate attachment to a vehicle you want to buy, and the prospect of negotiating head-to-head with a salesperson can be highly stressful.
Remember It Is Business, Not Personal
If you want to be successful in negotiating for your CPO car, you need to remove your emotions from the process. Buying a car is a business transaction, nothing more, nothing less. The dealer is trying to get the most profit possible out of the sale, while you are trying to get the best deal you can. In the end, you will likely pay a bit more than you want to, and the dealer will have to accept a bit less than they want to.
One way to help keep emotions in check is to take a trusted friend along when you go to the dealer. The best car-buying partner is the friend who demands you split the lunch check to the penny, not the one who encourages you to buy the latest iPhone. Going to the dealership alone allows an experienced salesperson to shake your confidence and lead you into a deal that might not be the best.
Most dealerships today simply want to sell cars and get a decent profit on sales. They know that automakers place increasing emphasis on customer satisfaction, so they will go a long way to keep their manufacturers happy. They know the more they haggle for the last penny, the lower their customer satisfaction ratings will be.
While you don’t want to be a pushover, being firm, yet polite, during the negotiation will pay dividends. Some buyers walk into the dealership looking for a bruising battle where they push the salespeople around. More often than not, that tactic will backfire. It’s much easier to stick a jerk with a lousy deal than it is to do so to a customer who treats you with respect.
Remember, Salespeople Are Pros
Car salespeople spend a significant amount of their time going through training to become better at their jobs. They are professionals at structuring deals that give the dealership an advantage over the consumer, and there’s nothing wrong with that, as long as they act ethically and legally.
That said, everything you do while you are at the dealer gives a trained sales professional information they can use during the negotiation. If you park near the showroom, they’ll know you are more ready to buy than a customer who parks at the far corner of the lot. If your trade-in is spotless, they’ll know you’re prepared to trade it in that day. They’ll look at your attire, the shoes on your feet, and the logos on your clothes to determine the type of person you are and what might appeal to you. Your best strategy is to dress professionally, somewhere between flashy and overly casual.
Unfortunately, there are still some dealerships out there pursuing age-old tactics targeted at the buyers who are least-prepared to counter them. Watching online dealer reviews can help you to identify those dealers that don’t deserve your business.
At this point, you’re you’re ready for the face-to-face negotiation that many buyers dread. The more professional and unemotional you stay, the better the chance you have to get a great deal.
Pinpoint the Price, Not the Payment
The first question asked by most car salespeople is “how much are you looking to pay per month?” While that is the way they want to sell the CPO vehicle, it is not how you want to buy. Instead, you want to remain laser-focused on the car price. When you allow a salesperson to sell you a car based on the monthly payment, you will enable them to manipulate the other factors in the sale (such as your trade-in, financing, and down payment) to maximize the car dealer’s profit at your expense. While having a payment that fits your monthly budget is essential, focusing on just that number is a mistake too many car buyers make.
It is said that the first person to give a price will lose the negotiation, and the salesperson knows this. That's why they first asked how much you want to pay per month. They want to back that number into an initial price offer. A key to negotiation is that the seller can never go higher than the first number they present, and a buyer can never go lower than the first number they offer. Once those parameters are set, you’ll likely have some back-and-forth to get to an acceptable number.
Starting too low will make the dealer think you're not a serious buyer that's worth their time. On the flip side, an initial offer that's way higher than you can afford is a signal you might be wasting your time. Remember, before you even arrived at the dealership, you had an idea of the market value you should be paying.
As you get closer to an acceptable price, you can start demanding something in return for every additional dollar you throw into the deal. Those extras can be things such as floor mats, lifetime oil changes, or even an extended warranty. The add-ons can add more value for you than they cost the dealer.
Keep in mind that you always want to be negotiating on the “out-the-door” price, including all dealership fees. It’s easy to give you a great price on the car if they know they can sting you on documentation fees and other junk charges on the final sales documents.
Though it takes some work, unbundling all of the components of the transaction is the best way to get a good deal on a CPO car. By having a preapproved financing deal in place before you head to the dealer, you already have a head start.
When you have a trade-in that’s bundled into the deal, a good salesperson can make the price of your new ride look great by low-balling the value of your trade. Conversely, they can make the value of your trade look amazing by raising the price of your CPO car or adding a year or two to the term of your auto loan. Keep talk of your trade-in separate until you’ve secured a price for the CPO vehicle you’re buying.
One popular way to unbundle the value of your trade-in by selling it yourself to a private party, another dealership, or a used car superstore. One word of warning on this strategy, however, is that not including your trade-in with your CPO vehicle purchase can force you to pay extra sales tax. In many states, the tax you pay is based on the difference between the car price and the value of your trade-in. When you take the trade-in somewhere else, you have to pay tax on the full purchase price of your new ride.
Many car dealerships today advertise a no-haggle sales model. That’s great for both buyers and sellers, if the no-haggle price is an appropriate amount for the cars they are selling. If it’s way too high, the car won’t be a good deal. It’s important to remember that if a dealer offers an attractive no-haggle price, they may work to get extra profit through expensive financing offers or profitable add-on products.
Be Ready to Walk
The most powerful negotiation tool buyers have is their ability to walk away from a deal they don’t think is fair. You might think it’s a simple tool to use, but many buyers fear the embarrassment of walking away or don’t want to give up the time they’ve already invested in the negotiation. Trust us, being a bit embarrassed or giving up a few hours is far less costly in the long-run than agreeing to a lousy deal.
Your work is not over once you've negotiated an agreeable out-the-door price on your CPO car. You still have a pile of paperwork and several decisions to make before you drive off the lot.
Look at Their Financing
Although smart consumers bring pre-approved car loans with them when they go car shopping, it’s a good idea to let the dealer have a crack at meeting or beating the offer. Just watch the terms they are offering to make sure the offer comes with more than just a lower monthly payment. You’re looking for a lower interest rate, a shorter loan term, or lower loan fees.
Watch Those Add-Ons
Dealerships make a tremendous amount of profit selling expensive add-on products such as gap insurance, extended warranties, and protection products. While there may be tremendous pressure to buy them “right now” so they can be included in your vehicle’s financing, it’s important to pause and research the add-ons before you commit. In many cases, you can buy the products from other sources at better prices. Most insurance companies sell gap coverage. Many lenders and insurers offer extended service contracts.
Check the Documents
One of the final steps in the CPO car buying process is signing all of the purchase, registration, and title paperwork. Though it may come at the end of a long day, it is critical to read each and every document, making sure they reflect the deal you agreed to.
Bring a calculator with you, so you can check the math on the papers and don't have to rely on the salesperson's math. It’s also a good idea to make sure that no add-ons have found their way into the documents.
Make Sure the Deal Is Done
Before you drive off the lot, it is imperative you are sure your financing has been approved and the documents have been finalized. Sometimes a dealer will let you take the car before all the loan paperwork is processed. The majority of deals go through just fine, but sometimes buyers are called back and told their financing fell through, and that they have to sign more paperwork. When they do return, the deal they agreed to has vanished, replaced with a much more expensive financing offer.
There’s even a name for this tactic – the Yo-Yo financing scam. You can avoid it by not taking the vehicle until all of the paperwork is complete.
More Shopping Tools From U.S. News & World Report
The experts at U.S. News & World Report believe you aren’t getting a great deal unless it’s on a great car. Our used car rankings and reviews look at evaluations from the country’s top automotive journalists, plus quantitative data on ownership costs, safety, and predicted reliability. Our goal is to find you a vehicle that’s the right one to buy and affordable to own.
Automakers frequently offer special financing deals on certified pre-owned cars. We track the best CPO deals on our used car deals page.
To check out which companies offer the best CPO programs, check out our Best CPO awards.