Buying Tips

Certified Used Cars — The Wave of the Future

The Internet manager of a Southern California Volkswagen dealership recently received an e-mail from a young woman shopping for a pre-owned Beetle. Her e-mail ended by saying, "VW Certified would be preferred."

The young woman, like many smart shoppers, has realized that certified used cars present an attractive alternative to buying a higher priced new car. For less money, a buyer can afford "more car" — and one that feels brand-new, even if the odometer is showing 20,000 or 30,000 miles.

More importantly, the certification process has removed one of the major drawbacks to buying a used car: uncertainty about the mechanical condition of the vehicle. If you are buying a certified used car, it has already been thoroughly inspected by a mechanic. Anything that was wrong, or about to go wrong, has been repaired.

"When it's a certified car, the manufacturer has gone out of its way to sell used cars that meet high standards," said Steve Skinner, Internet manager for Capistrano Volkswagen, in San Juan Capistrano, Calif. "We are definitely giving the customer a chance to get a quality car at a lower price."

Certified used car programs began appearing in the mid-1990s as more vehicles were returned by customers leasing their vehicles. These cars were in good mechanical condition, usually with fewer than 40,000 miles on the odometer. The best of these vehicles were put on sale at the dealership where the car was returned; the rest were sent to auction where they were acquired and then sold at used car lots.

Gradually, dealerships realized they needed a way to move these perfectly good vehicles that were building up on their lots. They needed a way to draw attention to the cream puffs and set them in a special category. The term certified used cars was a way to draw attention to the primo vehicles they were offering.

As the popularity of these programs increased, other manufacturers started their own certified used car programs. Now, nearly all brands offer such a program.

Here's how a typical certified used car program works. When a vehicle is returned from a lease, or traded in on the purchase of a new car, the dealership evaluates its condition and considers it for the certified used car program. Taking VW as an example, the car has certain requirements to meet right off the top: The car must be five model years old or newer with fewer than 75,000 miles on the odometer, and it has to have been operated by the previous owner for at least 12 months.

If the car falls within those guidelines, then mechanics check it over carefully. "We look at a car and say, 'How much money will it take to put this in the certified line?'" Skinner said. "If the cost is too high, we don't sell it from our lot."

Volkswagen then does a 112-point inspection of all major systems. If any problems are found, they are repaired, with the goal of bringing the vehicle as close to "as new" condition as possible. The car is then sold with a limited 2-year/24,000-mile warranty that covers, among other things, the powertrain, electrical system and air conditioning. Finally, 24-hour roadside assistance is provided for two years to ensure added peace-of-mind.

Many other manufacturers have similar inspections with comparable warranties. Honda completes a 150-point inspection and offers a limited factory warranty of seven years or 100,000 miles on the powertrain and 12 months or 12,000 miles on non-powertrain components, plus any unused new-car warranty coverage. To find out more about what your favorite automaker offers, check its Web site. It is usually linked, by zip code, to local dealers. On the dealer Web sites, it's often possible to search the certified used car inventory.

However, the words certified used car can mean different things to different dealers. Be sure to familiarize yourself with what has been inspected during the certification process and what is covered by the warranty. In some cases, the term certified has very little value, other than being an advertising buzz word.

Key questions to ask when shopping are: Who is certifying this used car? Does the manufacturer guarantee it, or is it certified only by that particular dealership? Obviously, if a manufacturer stands behind a guarantee, it is that much more valuable. For one thing, the warranty will be honored at other service departments, an important factor if a person is traveling or if they move to another state.

Edmunds.com once included a certified used car in its long-term fleet: a 1999 VW Passat GLS that was purchased from Capistrano VW. Our experiences with the car are listed in more detail in our long-term reviews of the car. Our Passat performed well with one exception. It began overheating on the freeway. We babied it into the dealership where the problem was easily remedied. However, the editor who interacted with the service personnel wasn't aware that the car was under a certified used warranty. When the vehicle identification number (VIN) was punched into the computer, the warranty went undetected. Later, the editor alerted the dealership staff to the warranty, and the repair was done under warranty. Therefore, when having repairs done, it's important to always tell the service advisor the car has been certified.

The certified used car programs that are proliferating have opened up a new market for shoppers who want to save money, but who want to drive a near-new car, with a solid warranty. To find out the specific benefits of each program see our Certified Used Vehicle Programs story.