A certified pre-owned vehicle is a used car. The differentiator over just any used car on the market is that a CPO vehicle has been inspected and vetted by dealer-trained mechanics and given a seal of approval and an extended warranty backed by the manufacturer.
There are various perks often attached to cars that have been certified by their respective manufacturers, such as roadside assistance and free satellite radio. The key is these vehicles are high-quality representations of that model and have been gone over with the automotive equivalent of a fine-tooth comb. Then that inspection is backed by an extended warranty to cover vital components. All of this can make a certified vehicle a viable alternative to a new model.
Here's an in-depth explainer on certified used cars, CPO programs, and whether it's worth pursuing when car buying.
What Is the Meaning of Certified Pre-Owned?
CPO cars, trucks, and SUVs are late-model vehicles with low mileage that need little reconditioning. Typically, these cars are two or three years old though some can be up to seven years old, depending on the manufacturer. Most have 10,000 miles or less per year on them and have never been in a significant wreck. A vehicle history report, such as one from Carfax, usually backs up these facts. If the dealer doesn't provide one, get one with the vehicle identification number (VIN).
Certified pre-owned cars are typically offered through new car dealerships on used examples of that brand's cars. While these dealers typically adhere strictly to the brand's certification standards, they may offer different perks on top of these. Separately, dealers may have their own certified pre-owned programs separate from a set of corporate standards.
Either way, make sure to get a rundown on what gets inspected and guaranteed under the program. Every program and every automaker has its quirks for picking what they consider to be the best-used cars on the market.
What Do You Get With a CPO Vehicle?
You receive two basic things with a CPO car versus a standard used car. First, you get a thoroughly inspected car warranty coverage that might include certain repairs if something goes wrong. That gives peace of mind rather than having to worry if you bought a lemon.
Second, you also receive a nearly new car for less than the price of an entirely new vehicle. Look for manufacturer-sponsored CPO programs as opposed to dealership-backed ones. Manufacturers give certified pre-owned vehicles with a more robust and comprehensive warranty than one offered by a dealership. You may also find additional perks from a manufacturer's CPO program, such as free roadside assistance, complimentary loaner cars, and special financing deals.
What Do Car Manufacturers Do for CPO Programs?
Manufacturers vary in their certified pre-owned vehicle programs. Luxury brands tend to offer more add-ons to their certified cars, but all should precisely detail the inspection process of a CPO vehicle. Mainstream brands like Toyota can offer comprehensive CPO programs with multi-point inspections. For example, Volkswagen takes cars with a clean title no more than six years old and have less than 75,000 miles. Then, a factory-trained mechanic performs a 100-plus point inspection to see if the vehicle meets the manufacturer's standards. Next, the dealership replaces or repairs any part that fails the check.
Again, the goal is to bring the car as close to as-new as possible. The dealer then sells the vehicle with a limited warranty for as much as two years or 24,000 miles to cover the powertrain, electrical, and air conditioning. You also get peace of mind with 24-hour roadside assistance and perks such as three months of SiriusXM satellite radio if the vehicle comes with the correct equipment.
Luxury brands such as BMW and Mercedes-Benz offer even more extensive CPO programs. The Lexus L/Certified program, for example, uses a more exact 161-point inspection checklist that covers things from body panel fit, electronics operation, and even if the first aid kit is still in the trunk. The company will even have the dealer arrange a loaner car your vehicle is there for warranty repairs overnight — just as they do for their brand new cars.
Manufacturers may not have the same standards for each CPO model, but the concept remains the same. Understand how much of the remainder of the original bumper-to-bumper warranty is left and what the powertrain warranty will still cover. As a result, you're buying a car that's higher quality than most used vehicles, but you will likely have to pay a higher price to do so.
What About the Costs of CPO Vehicles?
All things being equal with the same make, model, and mileage of a vehicle, CPO cars cost more than the usual used car. For example, the average price mark-up for a 3-year-old, certified pre-owned midsize sedan is $850. A CPO luxury sedan may cost an additional $3,000 versus a similar vehicle that hasn't been certified. However, the perks you get with a CPO program may outweigh the costs. You receive peace of mind for your purchase versus a non-certified used vehicle with no warranties.
A CPO vehicle will have undergone a much more thorough inspection process, has been better cared for by its previous owner and comes with a more comprehensive warranty. There may be some additional resale value if you sell the car before the extended warranty expires, but it's likely to be nominal. A subsequent owner can usually get another third-party warranty with a deductible instead.
Another perk of CPO ownership comes from free maintenance up to a certain mileage point. Dealers may offer to have oil changes and tire rotations as specified by the manufacturer. Free maintenance lowers your costs during the period of the deal. Once that maintenance package is up, you are responsible for all subsequent costs. Lower financing costs also come into play with CPO vehicles. Lenders working with or through an automaker can typically offer lower interest rates than on non-CPO vehicles. That can help to lower monthly payments.
What's the Bottom Line With CPO Cars?
Go with what you need when buying used. For example, if you want a well-maintained car that drives like new and has the manufacturer's backing, a certified pre-owned vehicle may be a wise choice. Especially for CPO vehicles that are relatively new or low mileage, incentives on new cars could be better than those on a similar certified model.
Alternatively, if you merely need point A-to-B transportation and are on a tight budget, you may consider a non-CPO used car and buy an aftermarket warranty for reassurance.
Remember, it can be financially wise to skip the extra cost of a CPO vehicle. If you're interested in a car and brand with an excellent reputation for reliability, save yourself the additional cost of CPO since the odds that you'll need it are lessened by that vehicle/brand's track record.
Either way, you should still practice due diligence when buying a used car. Narrow down the choices and find examples that look good visually and drive well. Track down as many service records as possible, and get an inspection done by an independent mechanic to make sure everything checks out on a test drive. These steps will give you the best chance of making the best possible purchase.