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Car Buying

Does Buying a Certified Pre-owned Car Make Sense for You?

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author photo by Russ Heaps February 2014

If you have discussed buying a used car with co-workers, neighbors and friends, then at least one of them has probably suggested buying a certified pre-owned (CPO) vehicle. These are used cars and trucks that have passed a very specific inspection process and are backed with some type of limited warranty by their manufacturers.

We are hearing more about CPO because new-car sales and leases have been steadily increasing since 2010. With more and more later-model trade-ins and a growing number of cars coming off 2- and 3-year leases, the pool of cars that can qualify as CPO is bigger, as well. The auto industry magazine Automotive News reported in January that more than 2.1 million CPO vehicles sold in 2013, an increase of 15 percent over 2012. Experts expect CPO deals to continue growing.

Things do go wrong with cars, even brand-new ones. After all, states have passed lemon laws, which protect consumers from new cars with chronic issues that a dealership is unable to fix.

Buying CPO isn't a guarantee that a used car won't have a repair issue. What it does tell you is that it is probably in better shape than the average used car. Additionally, if something does go wrong with a covered item during the CPO warranty, the manufacturer will fix it.

To make the decision whether to buy a CPO car or a traditional used car, there are a few basic issues that you should consider.

Does Certified Always Mean CPO?

Just because a used-car dealer advertises cars as certified doesn't mean that the dealer is backed by the cars' manufacturers. Often the used-car dealer is simply providing some sort of short, 30-to-60 day, return-or-fix warranty, providing a bit of protection in case a wheel falls off the car while driving it home from the dealership.

CPO refers to longer warranties, typically 12 to 24 months, managed and backed by the original car maker. They are only offered by a manufacturer's franchised dealer.

Is CPO Worth the Extra Cost?

You will pay more for a CPO vehicle than a comparable used car without it. Depending on the brand and value, the cost can increase the price by 3 to 7 percent. Is it really worth it?

If you are that person who has a rainy-day stash of cash for emergencies, maintains an annual service contract for your major appliances and belongs to an auto club for its free roadside assistance, then you are a prime candidate for CPO. You are willing to pay for peace of mind.

Many CPO programs, however, contain some added-value items that can help save money in other areas. Keep reading.

What Does a CPO Inspection Include?

Qualifying for CPO deals requires the dealership to inspect a used car following a checklist dictated by the manufacturer. If an inspected system or part doesn't meet the manufacturer's standard, it must be fixed or the car can't be sold as CPO.

The number of parts and systems inspected isn't the same for every manufacturer. Most CPO inspections include between 150 and 175 inspection points. The number, however, doesn't tell the whole story. Sometimes the point count increases by itemizing each part of a system rather than just counting the whole system.

Is One CPO Warranty About the Same as Another?

CPO warranties vary almost as much as the different manufacturers. Usually, there are different formulas for calculating the length of a CPO warranty based on whether some part of the original new-car warranty remains. In most cases, the CPO warranty covers a period of 12 or 24 months from the date of the CPO purchase, with a mileage limit of between 12,000 and 24,000 miles.

Although most CPO warranties don't require paying a deductible, some do. These range from Kia, Scion and Volkswagen at $50 to Chrysler's $150.

Nearly all CPO warranties are transferable to the new owner if you decide to sell the car, but there are a couple of exceptions, such as Infiniti and Porsche.

Are There Any Added Benefits to CPO?

Every CPO program has added benefits that increase the value of the deal. All include some amount of free roadside assistance, typically following the limits of the CPO warranty.

Nearly every program offers special financing deals. Some, such as Chevrolet, Lexus and Nissan, offer the same low, new-car financing rates on CPO deals.

Added services can also include free loaner cars during service visits, breakdown expense reimbursement when out of town, free oil changes and three months of free satellite radio subscription.

What Does It Mean to You?

If you are on the market for a low-mileage used car that's less than six years old, you don't want to hire a mechanic to perform a pre-inspection and you want peace of mind knowing that almost anything that goes wrong during the first few months of ownership will be fixed for free, then going the certified pre-owned route is a good bet.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
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Does Buying a Certified Pre-owned Car Make Sense for You? - Autotrader