Certified pre-owned (CPO) vehicles are some of the most highly coveted used cars on the market. They've been thoroughly inspected, are only a few years old, have low miles and are equipped with a more comprehensive warranty coverage. All these benefits come at a premium, however: CPO cars cost roughly $1,500 more than non-certified used vehicles. If you aren't willing to pay the higher price — or if CPO cars are over your budget — your next logical step might be to find a used car and then buy an extended warranty to go with it. Here's a primer on the two approaches and a few things to keep in mind.
What's a Certified Pre-Owned Vehicle?
A certified pre-owned car is one that has been lightly used, thoroughly inspected (and repaired if necessary) and then covered by a manufacturer-backed extended warranty. Keep in mind that this warranty isn't the same as a new car's "bumper-to-bumper" coverage. It's possible to get that type of coverage, but it will cost extra. CPO programs also offer additional benefits, which may include roadside assistance, free maintenance, satellite radio subscription and trip interruption coverage, depending on the program. These benefits are part of your car purchase — you don't buy them separately. Some CPO vehicles may even have low finance rates, offered as promotions that wouldn't be available in a traditional used-car deal.
What Does "Certified" Really Mean?
Some car dealerships put the "certified" label on used vehicles after they've put them through a basic inspection or reconditioning. These cars are not actual CPO vehicles. They have not met the manufacturer's criteria for inspection, nor do they come with a factory extended warranty. Additionally, only a genuine CPO vehicle can qualify for the additional perks of a CPO program.
Everything You Need to Find the Perfect Certified Pre-Owned Car
CPO vehicles are perfect for value-conscious shoppers who want a thoroughly inspected "near-new" car with a solid warranty. Learn more about CPO vehicles.
The cardinal rule is this: Only a manufacturer's franchised dealer can sell that manufacturer's CPO vehicles. This means that if a dealership can sell new BMWs, then it also can sell BMW CPO vehicles. It cannot, however, offer a Lexus or any other brand as an official CPO car.
If a car dealer tells you he will "certify the car" for you after you buy it, we recommend that you say no. No car can be certified after the fact. What you're actually being offered, in most cases, is an extended warranty.
Can You Get a "CPO-Like" Used Car and Just Add an Extended Warranty?
That might seem like a logical alternative to real CPO car, but it can be a complicated process. And it might not actually save you money.
First, the condition of the non-CPO used car will not be equal to that of the CPO vehicle. There is something about that used car that kept it out of the CPO program. It may have been too old or had too many miles. Maybe it had body dings that disqualified it. Plus, it will not have received the same degree of mechanical inspection and reconditioning as a true CPO car. In other words, if a CPO car is a "B+," the non-CPO vehicle might only be a "C."
And while you might find a private-party owner who is selling a car that could meet CPO qualifications, it won't come with the warranty or the other benefits we've mentioned.
Things get more complicated when it comes to the warranty. Remember that you are not going to get a factory warranty. It will be a warranty offered by a third-party company. Some of those have solid reputations, but some are spotty. You'll have to do your homework on price and coverage.
The warranty also might not be as comprehensive or offer coverage that's as flexible as a CPO warranty. For example, if the car needs repairs, you might have to take it to the dealer who sold you the car.
Finally, remember that you'll be doing two negotiations: one on the price of the used car and — if you want to be a smart shopper — one on the cost of the warranty. These warranties are high-profit items for car dealerships, and it can be difficult for the average consumer to research the actual cost. When all is said and done, the CPO car might be easier to buy — and maybe even less expensive.