A certified pre-owned (CPO) car is exactly what the name intends; it is a used car that has been certified by the automaker to be in excellent condition. The automaker backs up their evaluation by providing a factory warranty on the used vehicle, known as a CPO warranty. There are several advantages to purchasing a car with a CPO warranty and a few downsides too. If you are not sure if a CPO vehicle is right for you, then read our handy guide below to better understand CPO warranties and if they make certified pre-owned cars a better choice.
What is a CPO Warranty?
First of all, let's answer the question; what is a certified pre-owned vehicle? CPO cars are typically late-model used vehicles with low mileage. They have been thoroughly inspected and, if necessary, repaired and refurbished by the automaker. Once the car has passed the automaker's inspection test, it is covered by a manufacturer-backed extended warranty - known as the CPO warranty.
Nearly all CPO cars come with two factory warranties, including:
- The limited powertrain warranty
- The limited bumper-to-bumper warranty.
The bumper-to-bumper warranty (usually referred to as the "CPO limited warranty) isn't as comprehensive as the original bumper-to-bumper plan the car came with when it was brand new.
The bumper-to-bumper warranty excludes components designed to wear, like your brakes and tires, and generally covers things like the:
- Electrical system
- Infotainment system
- Navigation system
- Audio system
- Air conditioning
The limited powertrain warranty provides powertrain coverage and covers expensive mechanical components, including the engine and transmission system.
Most automakers separate the CPO limited warranty from the powertrain warranty and provide different guidelines for each in their CPO program. Additional benefits often include roadside assistance and trip interruption coverage.
Do all CPO Cars have a CPO Warranty?
In virtually all cases, CPO cars come with a CPO warranty. It is an automaker's way of backing up their quality inspection with confidence.
Back in the 1990s, some automakers started CPO programs to encourage low-mileage trade-ins and lease returns. Many used vehicles returned to dealerships in excellent condition as a result. Instead, used cars didn't make their way to auction because automakers created CPO programs to resell the trade-ins with detailed inspections, extended warranties, reconditioning, and extra perks.
Today, nearly every automaker offers a CPO program, but not every CPO program, although the various brands share some similarities.
Bear in mind that not all CPO vehicles are sponsored by their relative automaker. Some car dealers offer their own certified pre-owned limited warranty with similar benefits.
Examples of special CPO deals from manufacturers:
Audi: As low as 1.49%
BMW: As low as 0.9%
Cadillac: As low as 2.9%
Honda: As low as 0.99%
Infiniti: As low as 1.99%
Lexus: As low as 0%
Mazda: As low as 2.9%
Subaru: As low as 2.49%
Toyota: As low as 1.99%
Example of a non-luxury CPO program:
Toyota is an example of a non-luxury automaker. Their CPO program notes that each car must be seven years old or newer, and the vehicle must have less than 85,000 miles on the odometer. Qualifying used Toyotas will undergo a 160-point inspection, and they come with a CarFax vehicle history report.
Every certified pre-owned Toyota gets a 12-month / 12,000-mile bumper-to-bumper warranty as well as a powertrain warranty of 7-years / 100,000 miles.
In addition to the two factory warranties, Toyota also offers free 24-hour roadside assistance, a complimentary rental car, and travel reimbursement protection.
Example of a luxury CPO program:
Mercedes-Benz is an example of a luxury CPO program. For a used vehicle to qualify as a Mercedes-Benz CPO car, it must be six years old or newer (i.e., the model year), and the odometer must have less than 75,000 miles.
If the vehicle still has coverage under its original new-vehicle limited warranty, the warranty will transfer to the new CPO car buyer. If the original new-car warranty expired, the new owner would get an additional one year of certified limited warranty with unlimited miles.
Extras under the Mercedes-Benz CPO program include 24-hour roadside assistance and up to $300 in travel compensation for expenses incurred due to covered repairs.
Electric vehicles coverage:
Because the powertrains of electric vehicles are different from gasoline-powered cars, electric cars are covered differently by new-vehicle warranties. Battery-powered, fuel-cell, and hybrid electric vehicles get special treatment since their warranty covers battery packs, electric motors, and control electronics. Warranties for electric vehicles stipulate additional requirements and varied coverage lengths for the powertrain components.
Do CPO Warranties Make CPO Vehicles the Better Choice?
CPO warranties are enticing because they offer car buyers peace of mind, but take a look at some of the advantages and disadvantages of certified pre-owned warranties to determine if they make CPO vehicles a better option for you:
Advantages of a CPO Warranty
It will save you money: Buying any pre-owned vehicle will save you money upfront compared to purchasing a brand new vehicle. The automaker also guarantees a CPO vehicle to be in excellent condition. It is backed by a factory warranty, which means you will incur less mechanical hassle buying a used car, and should an item under coverage fail, you won't need to pay for the repair out of your own pocket. When buying a used car, there may be some hidden fine print behind its overall condition.
Peace of mind: A CPO warranty offers you peace of mind. You will get comprehensive protection and receive coverage for a long time on your used CPO car. You may get the same peace of mind with an extended warranty on a used car, but be careful of the fine print because they also have their own limits and exclusions. Studies have also shown that the benefits you claim on an extended warranty are often less than what you paid for it.
On-the-road support: Many CPO programs offer special features and a trial subscription that allows you to sample the brand's services. Some CPO programs provide 24-hour roadside assistance, complimentary maintenance for a period of time, a rental car, and towing assistance.
Disadvantages of a CPO Warranty
Limitations on vehicle choice: You may have your mindset on a specific car only to find that the exact vehicle you want isn't a CPO vehicle. Because CPO programs have age and specific eligibility requirements, they differ from one car to another, limiting your choice of vehicle if you want a CPO warranty. You may find your exact car at a dealership nearby; however, because of its model year and mileage, it may not qualify for a CPO program if it is too old or has too many miles.
Cost of CPO: Non-CPO cars are generally cheaper than CPO vehicles. This is because a vehicle with a CPO warranty has undergone a comprehensive dealer inspection, possible repairs, refurbishment, and maintenance, and it offers the security of a more extended factory warranty.
Required maintenance: CPO programs are stringent with their terms; you need to follow your manufacturer's maintenance schedule, and failure to keep up will void your warranty coverage. You also need to ensure your maintenance and services are performed under the franchised dealer like you would with a standard new-car warranty.
Best CPO Warranties of 2021
According to thebalance.com, the following are the best CPO warranties of 2021:
- Best for Luxury Cars: Lexus
- Best for Powertrain Coverage: Kia
- Best for Additional Component Coverage: Ford
- Best for Extending Original Manufacturer's Warranty: Hyundai
- Best for Vehicles with 15,000 Miles or Less: BMW
- Best for Exchange Flexibility: Chevrolet/GMC
- Best for Electric Vehicles: Nissan
- Best With No Deductible: Subaru
Should You Add on an Extended Warranty to a CPO Car?
There are pros and cons to adding an extended warranty to a CPO vehicle; you would need to weigh them against each other to determine if the additional cost is worth it.
An extended warranty bolted on top of your CPO warranty adds coverage for audio equipment, telematics, and other electronics not generally covered by a CPO warranty.
Some extended warranties also cover sensors, seals, and gaskets on engines, which aren't always covered by a CPO warranty.
If you plan on keeping your car for longer than seven years, then the addition of an extended warranty helps cover more items for a longer period.
You may spend money on an extended warranty that goes out of business. More warranty companies go out of business than car companies, often leaving car buyers with worthless service contracts and nothing to show for them.
Extended warranty cover only kicks in if the automaker doesn't cover a repair, so you may have redundant coverage if the CPO warranty steps in to cover repairs in most cases.