What Does Certified Pre-Owned (CPO) Mean?

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What is a CPO?

A certified pre-owned vehicle, or "CPO" for short, is a late-model used car that has gone through a thorough inspection and reconditioning and has been given a factory-backed limited warranty. Franchised dealerships sell CPO vehicles to meet two common goals of used-car shoppers: They want a fully vetted vehicle with warranty coverage, and they want to pay less than what a new car would cost.

The main benefit of a CPO vehicle is that the certification removes any uncertainty about the vehicle's mechanical condition. As a result, a CPO provides a buyer with an alternative to the higher cost of a new vehicle and still offers the peace of mind that comes from a factory-backed warranty.

CPO vehicles also come with benefits not found on other used vehicles, such as access to loaner cars, roadside assistance, and even maintenance for some brands.

Which certified used cars qualify for certification?

When someone returns a leased vehicle or trades in a car when purchasing a new vehicle, the dealership evaluates the used vehicle's condition and considers it for the brand's CPO program. Using Volkswagen's CPO program as an example, the used vehicle must meet certain requirements to be certified: It must be no more than 5 model years old, have less than 75,000 miles on the odometer, have a clean title, and show an issue-free vehicle history report.

If the vehicle falls within those guidelines, a factory-trained Volkswagen mechanic will perform a 100-plus-point inspection to ensure it meets the requirements of that manufacturer's program. The dealership performing the certification replaces or repairs anything that's worn beyond the limits of that manufacturer's program. If the mechanic finds any problems, they will also be repaired, with the goal of bringing the vehicle as close to as-new condition as possible.

GM offers a similar CPO program. Each vehicle undergoes a 171-point inspection and offers a six-year or 100,000-mile powertrain warranty from the vehicle's original in-service date. In addition to any remaining original factory bumper-to-bumper warranty, a 12-month or 12,000-mile bumper-to-bumper limited warranty is offered. Roadside assistance is also provided for the same duration as the powertrain warranty.

Ford's CPO program is known as Blue Advantage Certified. Potential Ford CPO vehicles are put through a 127-point, 139-point or 172-point inspection before receiving either a Gold, Blue or EV certification. Both Gold and EV-certified vehicles must be 6 years old or newer with less than 80,000 miles on the clock, while Blue-certified vehicles can be up to 10 years old and have up to 150,000 miles on the odometer.

Gold-certified vehicles include a one-year/12,000-mile comprehensive limited warranty as well as a seven-year/100,000-mile limited powertrain from the vehicle's original in-service date, along with roadside assistance and reward points that can be used toward the cost of your first two maintenance visits. Blue-certified vehicles include a 90-day/4,000-mile comprehensive limited warranty, roadside assistance, and rewards points that can be used toward your first maintenance visit. EV-certified vehicles offer a one-year/12,000-mile comprehensive limited warranty alongside an eight-year/100,000-mile limited warranty from the date of the original purchase, which covers powertrain parts such as drive motors as well as suspension components, electrical system parts and other hardware. Roadside assistance and reward points are part of the deal as well.

Luxury manufacturers tend to offer more generous coverage on their certified used cars. Lexus' L/Certified program, for example, includes a 161-point inspection, two years of free maintenance, access to loaner cars if yours is in the shop, and a two-year/unlimited-mile warranty (after the expiration of the four-year/50,000-mile new car warranty). To find out the specific benefits of each program, see our Certified used vehicle programs comparison tool.

CPO benefits come at a cost

The dealership pays for the certification process, and that's reflected in the higher prices seen on CPO vehicles. Expect to pay an average of 4.3% more, or $1,245, for a 3-year-old non-luxury CPO vehicle, according to Edmunds sales data. If you are interested in a luxury vehicle, it will cost an average of 4.7% more, or $1,938 for a 3-year-old CPO vehicle. As with any used vehicle, the price should be negotiable, at least in theory. But there may not be much wiggle room in today's market. Also, be aware that you'll be starting from a higher price than you would with a non-CPO model.

One added bonus is that a CPO vehicle will often have special low interest rates for those who qualify. These are usually lower than the rates you'd get for a non-CPO used car. The certification costs should be factored into the vehicle's price. If you see them listed as a separate fee, this is a red flag: The vehicle may not be a genuine CPO vehicle.

"Certified" doesn't always mean manufacturer CPO

To complicate matters, not all cars labeled "certified" are actually manufacturer-certified pre-owned cars. Here are a few of the situations you might encounter where a certified car is not part of a manufacturer's CPO program.

Dealer certified

Dealers will sometimes call their used vehicles "certified" because they've put them through a basic inspection and reconditioning and given them a third-party warranty. Dealers also sometimes take a vehicle from another brand, give it a third-party warranty, and label it as a "certified" car. (Think of a Chevrolet dealer selling a "certified" Ford.)

This kind of thing can create a lot of confusion for consumers because third-party extended warranties may not offer the same level of coverage as the manufacturer's CPO warranty. They might also require that you get the car serviced only at that dealership. Additionally, you might get fewer additional perks than you'd get from a manufacturer's CPO program, or none at all.

The important thing to keep in mind is that only a manufacturer's franchised dealer is authorized to sell that manufacturer's certified pre-owned cars. This means that if a dealership can sell new BMWs, then it can also sell BMW CPO vehicles. It cannot, however, offer vehicles from other brands as certified pre-owned cars.

If a salesperson tells you he or she will "certify the car" for you after you buy it, don't agree to it. While it is technically possible to certify a vehicle after the fact, in most cases, it means that the dealership wants to sell you an extended warranty under the guise of manufacturer certification.

Carfax certified

Cars with this label are not CPO vehicles. The Carfax certification refers to the guarantee that its accident data is correct and that the clean-title vehicle in question was never in an accident. However, it does not mean that the vehicle meets the manufacturer's criteria for inspection, and these vehicles also do not come with the manufacturer's factory extended warranty.

NIADA Certified pre-owned

You might also encounter used cars labeled "NIADA Certified." Dealerships offering these cars are members of the National Independent Automobile Dealers Association (NIADA). NIADA has created its own certification program that offers benefits that are similar to those of manufacturer CPO programs. This program includes a multi-point inspection of the vehicle, a limited warranty, and roadside assistance. There are also options to increase the coverage and lower the deductible for a fee.

One major difference is that the NIADA certification can be applied to vehicles that typically wouldn't qualify for a manufacturer's CPO program. NIADA's certified program can cover a vehicle that's up to 14 years old, while manufacturer programs generally do not cover a vehicle older than 10 years and are often limited to vehicles that are 6 years old or newer.

It's also important to note that the NIADA and the dealerships selling the vehicle aren't the administrators of the limited warranty. That's handled by either ProGuard Warranty or GWC Warranty. As with any third-party extended warranty, it's a good idea to research the company and read consumer reviews before you buy the product.

CPO shopping tips

Be sure you know who is certifying the car. Is it the manufacturer or the dealership? Familiarize yourself with what the manufacturer's CPO inspection covers during the certification process and what the warranty covers. If the certification is not from the manufacturer — which is likely what you'll find at independent used car lots — the certification has less value. Many of these car sellers don't have their own repair facilities.

If a manufacturer such as Ford Motor Co. stands behind a guarantee, it is more valuable. For one thing, any Ford service department will honor the CPO car's warranty. That's an important factor to consider if you travel or have to move to another state.

CPO programs are ideal for shoppers who want to save money over the price of a new car but who also want to drive a near-new car with a solid warranty. While CPO cars offer many benefits, they are more expensive than the non-CPO used cars that you can buy from dealers and private parties.

When you're ready to start shopping, take a look at the used car inventory on Edmunds. You can filter your search results to show only CPO vehicles. For more information on CPO cars, read Certified Pre-Owned Cars: A Reality Check and Certified Pre-Owned Cars Vs. Used Cars With Extended Warranties

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