They’re Gently Used
Manufacturer-backed certified pre-owned vehicle programs are only provided for cars with low mileage and a recent model year. For example, the Lexus Certified Pre-Owned program limits eligible cars to younger than six years old with fewer than 70,000 miles. Specific limits vary by manufacturer.
In other words, not every car traded in to a car dealership, returned from a lease, or purchased at auction will meet the rigorous standards that manufacturers demand of CPO vehicles.
Many of the certified used cars that you will find on dealer lots won’t be anywhere near their mileage limits, as they’ll be lease returns that are two or three years old with fewer than 36,000 miles on the odometer. Because lease terms require vehicles to be well-maintained without significant modifications or damage, lease return vehicles make excellent candidates for inclusion in certified used car programs.
They Haven’t Been in a Major Collision
The first thing that the dealer checks with candidates for a CPO program are records that would indicate that the vehicle has been in a significant collision. Most programs exclude vehicles that have had major body damage, and nearly all exclude any car that has suffered frame damage.
Like most other aspects of certified pre-owned programs, what’s allowed varies by manufacturer, so be sure to read the program’s fine print to find out.
Of course, those records may not be perfect, so you’ll want to see a full vehicle history report, just as you would on any used car, and you will still want to have the car checked out by an independent mechanic.
They’ve Been Inspected
Because certified pre-owned cars are typically protected by extended warranties, manufacturers have an incentive to make sure that everything’s in proper working order before putting them up for sale. You’ll hear manufacturers talk about hundreds of inspection points. The number isn’t important as long as it covers every major system.
Just knowing that the vehicle has passed an inspection is comforting to many buyers, especially if the inspection includes documentation about the proper repair of any items found to need attention. The dealer’s inspection, however, doesn’t eliminate your need to have an independent mechanic look over the car to verify what the dealer is telling you, as well as find anything that the dealer may have missed.
They Come With a Warranty
Though not all CPO programs are created equal, the best provide bumper-to-bumper warranties, just like you get with a new car, as well as additional powertrain warranties that extend coverage for a long time or high mileage. Certified used programs from manufacturers, including BMW, Porsche, and Volvo, can cover some vehicle systems up to 100,000 miles.
The Lexus L/Certified pre-owned warranty covers the car for two-years from the end of the original warranty or the date that you purchase the vehicle (whichever is later) with no mileage limit.
The warranties offer buyers a high degree of certainty about their total cost of ownership during the years that the car is covered, knowing that unexpected repair costs won’t jump up and bite them.
You’ll want to understand the different warranties offered on the certified used cars that are on your shopping list. Some tack the warranty extensions onto the end of the factory warranty, but for others, the warranty extension is from the time that you buy the car. There are also differences between bumper-to-bumper warranties and powertrain warranties that only cover the engine, transmission, and running gear.
Some bumper-to-bumper CPO warranties do not cover every component. Sometimes advanced electronics such as navigation systems are excluded, and in some cases, there is a deductible that you must pay toward any warranty claims.
Don’t confuse an extended warranty offered by a dealer on a used car with a certified used car. They are not equal. Manufacturer-supplied warranties offered on certified used cars are valid at any of the brand’s franchised new car dealerships and aren’t limited to just the dealership selling the extended warranty.
They’re Not Just Luxury Cars
At their genesis, certified used cars were only offered by luxury brands, but that’s not the case today. Now non-luxury brands, such as Kia, Honda, Hyundai, Chevy, and Toyota, offer certified used cars. Most non-luxury brands don’t offer the same warranty extensions as luxury brands, however.
Typically, non-luxury brands offer warranty extensions of around 12 months or 12,000 miles. A notable exception is Hyundai, which will transfer the balance of the car’s original 10-year/100,000-mile powertrain warranty to buyers of certified used models.
They Can Come With Special Deals and Financing
Manufacturers frequently offer special certified used car financing deals, which can save you thousands on financing costs during the term of your new car loan. Deals with rates of 2 percent are currently common, with some manufacturers offering rates as low as about 1 percent.
Some credit unions and banks also look favorably on certified used cars, offering the same or similar rates to those they offer for new car purchases.
Before you head to the dealer, you should get pre-approved for financing from a bank, credit union, or other lender. That way, the dealer will have more incentive to find you a finance deal to beat the one that you already have in your pocket. Check out the tools on our financing page, where you can apply for a loan and calculate your payments.
Other CPO Benefits
The benefits of buying a certified pre-owned car don’t stop with the inspections and warranties. Many companies offer extra fringe benefits, such as no-cost maintenance, roadside assistance, and replacement transportation if your car is ever in the shop.
General Motors offers a no-cost maintenance program on their vehicles, for example. Buyers of CPO Cadillacs, Buicks, Chevrolets, and GMCs get two years or 24,000 miles of free scheduled maintenance. GM also offers CPO buyers the opportunity to exchange their cars for three days or 150 miles if they don’t like the car that they chose.
Some manufacturers, including Lexus, provide loaner cars directly from the dealership, while others provide rental cars while your car is repaired. Hyundai offers 24-hour roadside assistance to buyers of its certified used cars, plus trip interruption reimbursement, towing, and flat tire repair for 10 years from the vehicle’s initial in-service date.
Many manufacturers offer a three-month trial of SiriusXM satellite radio on any certified pre-owned car.
Downsides: They’re More Expensive
Now the downside of buying a certified used car. It’s going to be significantly more expensive than buying a comparable non-certified used car. You have to pay for that inspection, warranty, and any other fringe benefits the manufacturer offers on their CPO models.
On a low-priced car, the difference might be a few hundred dollars, but on a high-end luxury car, a CPO car, truck, or SUV can cost you thousands more.
In order to get the best deal, you’ll want to know how much you should be paying for the car and then factor in the value of the benefits of buying a certified model. Like other car-buying transactions, the price of CPO cars is negotiable, and you can walk away if the price isn’t right.
Downsides: It’s Still a Used Car
Although buying a certified pre-owned car from a new car dealer will feel like buying a new car, in the end, you’re still buying a used car. Unless the dealer replaced them as part of their refurbishment process, the car will still have wear on its tires, brakes, and other mechanical components.
If you buy a car with 25,000 miles on the odometer but it’s still on its original tires, you are going to have to replace them in the near future, and it will cost you hundreds, if not thousands, of dollars to do so. Not all CPO programs cover maintenance, so those used brakes may soon wear out as well and cost you money.
Finally, inspections aren’t perfect, and you never know just what a car went through during its first couple of years on the road.
More Car-Buying Tools From U.S. News & World Report
You should start any car-buying odyssey at U.S. News & World Report’s Best Cars site. There, you’ll find rankings of used cars, and you can see what used cars are available in your area. If you’re on the fence about new vs. used cars, you can read about the benefits of both.
Each month, our expert journalists and researchers scour the market to find the best deals on certified used cars.
For the latest in new and used car buying advice, follow us on Facebook and Twitter.
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Is a CPO Car Right for You?
You want a new car but don’t want to take the first year’s steep depreciation hit. You don’t want the risk of buying a used car because you might get a clunker. Fortunately, there’s a way to get the best of both worlds.
Certified used cars are gently used vehicles that are sold by new car dealerships with limited age and miles and generally after a thorough inspection and reconditioning. Most are sold with a manufacturer-backed warranty and other customer benefits.
They’ve already taken the huge amount of depreciation that most cars have during their first year of use, so they’re less expensive than buying a new car.
To be clear, when we talk about certified used cars (also known as certified pre-owned, or CPO), we’re talking about cars that are part of manufacturer-sponsored programs, and not just cars that have a “Certified” sticker slapped across the windshield by an unscrupulous used car dealer with nothing to back up the certification.
On the following slides, we’ll look at the advantages of buying certified pre-owned cars, and one significant disadvantage.