What Is a Certified Pre-Owned Car?

Certified Pre-Owned Vehicles Quick Facts

• A certified-pre-owned vehicle is repaired and inspected via stringent manufacturer standards.
• Most CPO cars come with a warranty.
• Authorized dealers typically offer CPO cars that are 6 years old or newer, with less than 80,000 miles.
• Each automaker uses a different set of criteria for CPO cars.

A certified pre-owned car is a vehicle that passes a rigorous inspection and standards set by the manufacturer to get a CPO designation for resale. During the multi-point inspection, factory-trained dealer technicians will replace or repair vehicles with authorized parts. Most CPO cars come with additional factory warranties, and sometimes extras like oil changes for a designated timeframe. CPO certification standards vary by carmaker. Many carmakers offer certified pre-owned cars that are 6 years old or newer with less than 80,000 miles.

Some manufacturers, like Honda and Acura, offer CPO vehicles for lease and sale. However, you can only purchase a CPO vehicle at the manufacturer’s authorized dealerships, so you can only find a certified pre-owned Kia at a Kia dealership or a Toyota at a Toyota dealership.

If you see a car that is “dealer certified,” this is not a certified pre-owned car. The vehicle does not offer the backing of the manufacturer certification to make it a CPO car.

Continue reading for answers to common questions about certified pre-owned cars and whether they are a good option for you.

• What Does Certified Pre-Owned Mean?
• Certified Pre-Owned vs. Used Cars
• How Is a CPO Warranty Different from an Extended Warranty?
• What Is the Difference Between a Certified Car and a Service Contract?
• Other Common Questions About CPO Cars

What Does a Certified Pre-Owned Car Mean?

A CPO car means the vehicle has previously been owned and, after a thorough inspection and repairs, comes with the backing of the original manufacturer. It means you may spend more, but if it breaks down, warranties may cover it.

Are Certified Pre-Owned Cars Worth It?

For some, it’s worth buying a certified pre-owned car even if it costs more than a typical used car because it comes with the extra assurance and backing of the manufacturer.

Here is a breakdown of the pros and cons:

Certified Pre-Owned Cars vs. Used Cars

A certified pre-owned car comes with a complete manufacturer inspection and replacement parts or repairs for any damage occur before a dealership sells the vehicle. When buying a used car, the buyer must pay for an inspection and any subsequent repairs to get this same service.

A CPO car includes an extended factory warranty and a limited bumper-to-bumper warranty, as well as other services, such as maintenance and 24-hour roadside assistance. A used car usually offers the remainder of the factory warranty, though only if it’s still in effect and fully transferable.

How Does a Car Qualify for Certification?

When the dealer acquires a used car through trade-in or lease return, it will undergo a multi-point inspection program administered by a factory-certified mechanic.

If the car, truck, or SUV meets the manufacturer’s criteria, dealers can sell it as a certified pre-owned vehicle. The fundamental factors for a potential CPO car are that it must be in excellent condition, mechanically and cosmetically. Many are low-mileage vehicles.

If it doesn’t meet the CPO program requirements, dealers can fix the car’s problems, or the vehicle may face rejection from the program. Each automaker uses a different set of criteria. Still, the bottom line is that CPO vehicles will be the highest quality used cars.

Who Certifies the Cars?

A CPO car gets certified by the dealer and follows the manufacturer’s specifications and requirements. The dealer’s factory-trained technicians perform the inspection and make necessary repairs. If the car meets those standards, the automaker fully certifies and backs the vehicle as if it were selling a new car.

Can You Buy a CPO Car from an Independent Dealer?

Typically independent car dealers can’t offer certified pre-owned vehicles backed by the manufacturer because only factory-authorized dealers can offer them. For example, Honda offers its own Honda CPO program and you can only find it at an authorized Honda dealership. Also, you can’t get a certified pre-owned Honda at a Kia dealership. However, there’s an exception. If an independent or other dealership has a 2022 Honda Civic with an existing certified pre-owned warranty backed by Honda still left on it, that warranty transfers with the car to its next owner.

How Is a CPO Warranty Different From an Extended Warranty?

Every car comes with a manufacturer’s warranty. Manufacturers usually offer an extended warranty when the car is purchased new, but it’s up to the buyer to purchase the additional coverage for the vehicle. The extended warranty continues the factory warranty for specific parts and may include a higher deductible as the vehicle ages. It may or may not be fully transferable. Typically, a CPO car will come with its own manufacturer’s warranty for a set period of time.

Each automaker has different terms and conditions for its certified pre-owned criteria and warranties. As the buyer, you must examine the fine print and determine if the added coverage is worth the extra cost.

What Is the Difference Between a CPO Car and a Service Contract?

A service contract is a coverage agreement initiated by an independent underwriter, not a manufacturer. Some states require insurance companies to underwrite service contracts, making it easier to verify their validity. Advertisements sometimes call these contracts “certified,” but the agreement is fundamentally different.

There are numerous options with a service contract covering mileage and age and who must perform the repairs. In many instances, a service contract requires the buyer to foot the bill for repairs upfront and then seek reimbursement.

Consumers must address reimbursement disputes with the contract administrator, not the dealer that performs the work. You can run the risk of the contract underwriter going out of business. If that happens, the business closure can nullify the prepaid contract, although the dealer may still be required to honor the contract as laws covering these services vary by state.

Remember, a service contract is essentially breakdown insurance, and the automaker does not back these programs. Some of these contracts only cover moving parts or major mechanical components.

You are usually not required to get a service contract to obtain financing, so beware of any dealer that tells you otherwise. Some service contracts do not take effect until the manufacturer’s warranty expires and may come with high deductibles. Whatever you do, be sure to read the fine print.

Other Common Questions About CPO Cars

Take a look at these additional questions people commonly ask.

Why Do Certified Cars Cost More than Other Used Cars?

CPO vehicles will cost more than typical pre-owned cars. The warranty coverage is factored into the sale price. In some cases, the premium for a CPO warranty may not align with the actual value it provides, potentially making it overpriced.

Is a CPO Warranty Transferrable?

In general, most automaker-certified pre-owned warranties are transferrable, but not always. Although nearly all automakers offer a transferrable certified pre-owned warranty, buying a CPO car with remaining warranty coverage doesn’t necessarily mean that the warranty automatically transfers to you.

The majority of automakers note that once a CPO vehicle sells to another person, the next owner usually must notify the automaker of a vehicle sale. They confirm that the warranty will remain valid even once a car has been sold to a new owner.

Some automakers request a fee in order to transfer a vehicle’s warranty. For example, Volkswagen requires a $150 fee before it will transfer the warranty to the next owner, while BMW requires $200 and an application for transfer, as stated on its website. That figure is small when you consider the potential savings offered by a comprehensive, manufacturer-backed warranty should something major go wrong.

Also, most CPO warranty transfers are limited. Coverage will cease if you buy a certified pre-owned car from one owner and then resell it to another. Additionally, most CPO warranties exclude sales through non-authorized dealerships. That means a car owner who trades in a used Ford with a certified pre-owned designation to a Chevrolet dealership cancels out any possibility of a certified pre-owned warranty for the next buyer.

Do You Have to Take a CPO Car to a Dealership for Service?

In general, we recommend that you keep up with regular maintenance, such as oil and fluid changes, at the dealer, rather than at an independent mechanic or another shop. There’s a reason for this: If you conduct your CPO car’s maintenance at the dealer, then the automaker won’t have any possible way to deny a claim if a serious breakdown occurs in the future.

For example, consider your car’s transmission, which typically requires occasional fluid changes. If you visit the dealer to complete the fluid changes and your transmission eventually breaks under warranty, the automaker will likely cover the replacement with no questions asked. However, if you’ve done the fluid changes yourself, or at an independent shop, the automaker might question whether they’ve been done properly. The result is that you may find yourself in a situation where your transmission replacement isn’t covered under warranty.

Can You Lease a Certified Pre-Owned Car?

Yes, it’s possible to lease a certified pre-owned car. However, leases come with restrictions, like average annual mileage you can drive the vehicle. They often cost less than CPO cars, however you will not own anything at the end of the lease unless you opt to purchase the vehicle at the end. Read more about leasing a vehicle.

Editor’s Note: This article has been updated to reflect changes in certified pre-owned programs.