Certified pre-owned (CPO) cars are a popular choice among those looking to buy a used car without the risk of buying one with problems. But is CPO worth it?
Yes, CPO vehicles are generally considered a great alternative to owning a new car and provides the car buyer with peace of mind.
However, CPO vehicles may cost more than a comparable non-CPO used car. Still, the benefits CPO models come with are not usually found on other used cars, such as a limited warranty covering certain major repairs, roadside assistance, and access to loaner cars. This can make the extra cost more than worth it to many buyers.
Here's a look at certified pre-owned vehicles and if they are worth it.
What is a CPO Vehicle?
A certified pre-owned vehicle is a late-model used car that has been reconditioned and has passed a thorough inspection. They're usually backed by a limited factory warranty or CPO warranty. For a vehicle to be certified pre-owned by the manufacturer, a professional mechanic will ensure that the car measures up mechanically and qualifies for the program.
Franchised new car dealerships will sell CPO vehicles to provide car buyers with the peace of mind to purchase a reliable car. In addition, purchasing a CPO car removes a lot of uncertainty about the vehicle's mechanical condition and is often a more attractive alternative to buying a new, higher-priced vehicle.
Which Cars Qualify as CPO Vehicles?
When someone trades in a used vehicle during a new vehicle purchase or returns a leased car, the dealership will evaluate its overall condition and determine if it fits the brand's CPO program.
Volkswagen, for example, have a CPO program, but the vehicle needs to meet specific requirements:
It needs to be a relatively new model and no more than six model years old.
The car needs to have low mileage — less than 75,000 miles.
Must have a clean title.
Must have an issue-free vehicle history report and regular servicing and oil changes.
If the vehicle meets the criteria above, a factory-trained Volkswagen mechanic will perform a 100-plus point inspection to ensure it is suitable for the manufacturer's CPO program. Should they find any mechanical issues, they will repair the vehicle to ensure it is as close to as-new condition as possible.
The Volkswagen dealership will cover the CPO vehicle with a limited two-year/24 000-mile warranty. The warranty coverage includes the powertrain, air conditioning, and electrical system, among other things. Volkswagen will also provide two years of 24-hour roadside assistance for added peace of mind.
Several manufacturers have a similar certified pre-owned program that involves multipoint inspections and extended warranties, including Hyundai, Kia, and Toyota. For example, Honda's CPO program includes a 182-point inspection and a limited seven-year/100,000-mile warranty on the powertrain. They also have a one-year/12,000-mile warranty on non-powertrain components.
CPO Benefits Carry a Cost
We have mentioned some of the benefits of a certified used car, but they come at a cost. The dealership needs to pay for the certification process, a fee that reflects on the higher price tags associated with CPO vehicles. However, the certification costs should not be listed as a separate fee. That is a big red flag and could indicate that the car isn't an actual CPO vehicle.
You can expect, on average, to pay 6.2% more, or $1,127 for a 3-year-old non-luxury CPO vehicle, according to Edmunds. However, if a luxury car, like a Porsche, is what you are after, expect to pay 8.3% more for a CPO car. Remember that you can negotiate during the car buying process, but keep in mind that the pricing for a CPO car is higher than a non-CPO vehicle.
A bonus about purchasing a certified pre-owned vehicle is that they often have special low-interest rates for those car buyers who qualify. They are usually much lower than the interest rates of an ordinary used vehicle.
CPO is Still Not New
It might be hard to remember that CPO stands for "certified pre-owned" and not "car problems out" since advertisements often tout CPO cars as basically new and problem-free. However, no matter how carefully inspected or refurbished, a used car will never be brand new again. To further complicate the "certified" term, not all vehicles carrying the label are manufacturer-certified pre-owned cars.
Some vehicles have a "certified" designation but are not part of a manufacturer's CPO program. Below are examples of some of these instances:
Dealer Certified: If a dealership places a used car through a basic inspection, reconditions the vehicle to as close to new as possible, and provides an original third-party warranty. They will label that used vehicle as "certified." Sometimes, a dealership will take a car from another make, provide a third-party warranty, and market it as a "certified" car. For example, imagine a Chevrolet dealer marketing and selling a "certified" Ford.
The cardinal rule is that only an automaker's franchised dealer can sell that specific manufacturer's CPO vehicles. It essentially means that if a dealership can sell new BMWs, it can sell BMW CPO vehicles. However, it is not allowed to offer cars from other brands as CPO vehicles.
Carfax Certified: If you come across a Carfax-certified vehicle, it is not a certified pre-owned car. If a car carries the label of being Carfax certified, it refers to the guarantee they provide that the accident data is correct and the clean-title vehicle was never involved in a car crash. In addition, there is no manufacturer's factory extended warranty that accompanies the sale.
CPO Buying Tips
It's important to understand that CPO vehicles may still have problems. There are plenty of examples of buyers who had issues with their CPO vehicles shortly after buying them, and most tend to believe that a service team should have caught the problems before the car was certified.
In many cases, these issues were not because it was a used car, but because it was a common issue with the car's model period. In other words, it's essential to research your vehicle of choice before buying it thoroughly. The service department should complete actual recall work before the dealer sells the car, but some other common issues with certain vehicles never reach the level of a recall. In this case, you can either attempt to get it fixed under warranty, repair it yourself, or simply live with it.
Although there's no surefire way to avoid any problems with a CPO vehicle, there are a few ways you can minimize the risk.
Key among them is to ensure you know who is certifying the car. One of the first ways is to ensure that it's a real CPO in the first place. As we mentioned earlier, dealerships may mark some vehicles on their lot as certified, but that doesn't mean that it's certified by the manufacturer.
So if you want to buy a CPO Chevy, you need to go directly to an authorized Chevrolet dealer. Next, look at the window sticker to check the automaker's CPO logo and who's backing the warranty. As long as the companies are the same, you're on the right track.
What Does the CPO Warranty Cover?
The next step is to find out precisely what the warranty covers. CPO vehicles from the manufacturer always provide at least a limited warranty and sometimes a limited and powertrain warranty. Many CPO programs have differences in their coverage that can be confusing.
For example, certified pre-owned Lexus vehicles carry a three-year-from-your-date-of-purchase or 100,000-mile warranty. The Lexus CPO warranty, for example, includes 24-hour roadside assistance, Trip Interruption Service, and a complimentary loaner car.
Inspect the Car
Just because a vehicle is a CPO doesn't mean that you shouldn't completely inspect it before signing the sales contract. Some complaints from CPO buyers have indicated that the car they bought had damage. Even if the dealer repairs the car when alerted to the damage, the question has to be asked why the buyer let the sale go forward in the first place. The damage would immediately become apparent if the buyer did a walk-around or a test drive before the deal closed.
The point is that you should not blindly trust that a CPO vehicle will be wholly unblemished and free of any issues. You should thoroughly check it before closing the sale or even proceeding with the sale. If you're concerned with mechanical problems that you can't see, then have a mechanic inspect it first as well. Just make sure that you understand the information provided to you after a mechanic's inspection.
Always Follow Up
Don't let any issues with a CPO slide. Instead, follow up on them with the dealership and even with the manufacturer if necessary. In one example from Edmunds, a buyer discovered that his CPO vehicle did not have tires that met the automaker's specific standards. The buyer further learned that the particular automaker would not approve a CPO vehicle without tires that met those standards.
Concerned that the non-standard tires could compromise the warranty in the future, the buyer followed up with the dealer to resolve it. The dealer was uncooperative at first, but eventually, they agreed to replace the tires with a brand-new, approved product when the automaker got involved.
So, is CPO Worth it?
Despite these tips and advice, it doesn't mean that buying a CPO is a bad idea. It simply means that you need to do your due diligence before purchasing one, just like any other type of vehicle.
Is it possible to find a good used car that rivals any CPO and save money simultaneously? Absolutely. However, it might take a lot more time and effort.
Furthermore, if you don't have any deep mechanical knowledge, you could spend a lot of time taking prospective vehicles to mechanics. You also won't get a warranty or emergency perks that a CPO program offers either.
In the end, it's essential to understand that a CPO program isn't perfect, but it does reduce the usual level of risk involved in buying a used car. A CPO is worth it because it is a near-new car without the higher price tag of a new car, and it has a solid warranty compared to that of older used cars.