If you’re interested in a used car with a warranty, you might find yourself trying to decide between two different types of plans: a manufacturer-backed certified pre-owned (CPO) warranty or an aftermarket extended warranty, which is usually a third-party warranty sold by dealers to drivers who buy used cars that don’t include a manufacturer warranty. So what’s the difference between a CPO warranty and an extended warranty? We’re taking a closer look to help you decide between the two.
One major difference between a traditional CPO warranty and an extended warranty is pricing. Specifically, an extended warranty is typically in addition to a car’s price, while a CPO warranty is included in the car’s pricing. That doesn’t necessarily mean that CPO cars are cheaper than their counterparts with extended warranties. Instead, it simply means that most dealers add the warranty price to CPO vehicles, rather than pricing the warranty separately.
Another pricing difference is that CPO warranties come in a simple, one-size-fits-all package, while extended warranties do not. For example, every single Lexus offers 3 years or 100,000 miles of coverage, regardless of age or model. That isn’t necessary true of extended warranties, which are often available for varying lengths of time and coverage areas. For example, if you only plan to own a car for a year, you can probably get a 1-year extended warranty. If you only want to make sure that the engine and transmission are covered, there’s probably an extended warranty available for just those items, too.
Another common difference between CPO warranties and extended warranties is the level of coverage. For example, most CPO warranties offer at least some degree of bumper-to-bumper coverage for the vehicle. Many extended warranties, however, are more limited in coverage.
With that said, shoppers can usually choose what they would like their extended warranty to cover. For instance, drivers can usually choose between an inclusionary extended warranty, which covers only named parts (often related to the engine or drivetrain) and a far more comprehensive exclusionary warranty, which covers everything except named parts — usually items that aren’t covered by a normal warranty, such as smashed body panels or torn upholstery.
Drivers who choose an inclusionary warranty will likely find that the warranty is cheaper than CPO coverage or an exclusionary warranty, but they’ll also find that the coverage is significantly more limited than that of a certified plan.
Trustworthiness is one major reason why many shoppers go with a CPO warranty over an extended warranty. This is largely because most shoppers are unfamiliar with extended-warranty companies, whereas they have a lot more trust in a manufacturer-backed CPO warranty plan.
While we understand this point of view, we believe that there are several trustworthy warranty companies out there. In our view, you should do your homework to make sure that you can trust any warranty you buy — either a manufacturer plan or a third-party extended-warranty company. If you don’t find much information on a company — or if you find a lot of serious complaints — you might want to ask the dealer for a recommendation on a different warranty company or possibly consider a CPO model instead.