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Certified Pre-Owned: Why Not Just Buy an Extended Warranty Instead?

It’s human nature to always look for a better deal. When it comes to certified pre-owned (CPO) cars, we might think we can outsmart the system, scoring a CPO-quality car and avoiding the $1,500-or-so premium a CPO vehicle costs over and above a regular used car. Accomplishing this is no big secret. Simply find a relatively new used car with low miles and well-documented scheduled maintenance history, and purchase an extended warranty. That extended warranty may cost $1,200, but hey, it’s better than that extra $1,500 or more you’ll pay for a genuine CPO vehicle, right? Maybe, maybe not.

Why CPO?

If you are considering CPO, it’s more than likely that you’re searching for that sweet spot between the peace of mind that comes with a new car and its bumper-to-bumper warranty, and the lower price of a used car. It’s a balancing act worthy of The Flying Wallendas. The question you must ask yourself is, will you have the same peace of mind with just an extended warranty as you would with CPO? Probably not.

Here’s Why

When you buy CPO, you are essentially making a contract with the car’s original manufacturer. Although the local franchise dealer does all the heavy lifting, the entire process is dictated and monitored by the brand, be it Chevrolet, BMW, Honda or whatever. The comprehensive inspection is orchestrated by the brand, which requires the necessary repairs to those inspected parts and systems. The CPO warranty is issued and backed by the brand, and any complaints or issues you have with the CPO program will be heard by the brand as well. Repairs to anything covered by the warranty can be made at any of the brand’s thousands of franchised dealers.

When you buy an extended warranty, it’s you and the third-party warranty company. Once the used-car dealer sells the warranty, he or she is out of it. Often there are only a limited number of facilities where warranty repairs can be made. In other words, the extended warranty is only as good as the warranty company. So if you decide to go that route, do your research and choose wisely.

Moreover

You simply can’t discount the value of the comprehensive inspection every CPO vehicle undergoes. Even if you paid your local mechanic to inspect a used car before buying it, it won’t be as comprehensive as a CPO inspection. Additionally, no matter how good a used car looks, it hasn’t been reconditioned as a CPO vehicle has.

And then there are the little added-value perks included in many CPO programs, including unexpected extras such as roadside assistance, free satellite radio, free loaner cars, special financing rates, free scheduled maintenance and more.

What It Means to You: Only you can put a price on your peace of mind. CPO does cost more, but it also delivers a lot more than an extended warranty. You decide if it’s worth it.

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