According to a recent J.D. Power and Associates study, sales of certified used cars have increased 46 percent since 2000. For many people, certified used cars have become affordable alternatives to new cars. By "certified used" or "certified pre-owned," we mean used cars that are offered for sale by your local dealer and feature warranties that extend beyond the initial "when new" coverage.
To qualify for our definition of a "certified used" vehicle, the warranty must be backed by the original vehicle manufacturer. The original manufacturer of the vehicle is using its dealer network to inspect the car, determine if it is worth certifying and then offer support for the vehicle for a period of time beyond the original warranty. Not all used cars can qualify for certified pre-owned programs, and terms vary from one brand to the next, but any true certified pre-owned program will include at least a 100-point inspection of the car. If problems are found, the factory-trained technicians will fix it or disqualify the car from the program. The certified warranty protection typically takes effect when the original warranty expires and, like a new car warranty, offers coverage for a certain number of years or miles, whichever comes first.
Used cars sold with third-party warranties are sometimes advertised as "certified" but are not truly factory-certified because the authority and expertise of the vehicle's manufacturer is not standing behind the "warranty" in any way. In fact, the term "warranty" may be misleading, as third-party warranties are really just extended service contracts that the buyer must purchase at an additional cost. Extended service contracts can usually be purchased for any vehicle, and the vehicle's manufacturer is not involved in any coverage promised by the aftermarket service contract. A true warranty offers coverage that is included in the original purchase price.
The major downside to third-party service contracts is that they often obligate the customer to pay for needed repairs up front, and then wait for a reimbursement check; some require the payment of a deductible that can vary from $50 to $400. In addition, there is always the risk that the insurance company or other underwriter of the service contract will not be around to honor the warranty when a claim is made this risk is much less when the responsible party is a vehicle manufacturer. Also, most extended service contracts do not require the rigorous inspection and repair procedures that a real certified program offers.
In many cases, a customer who purchases a certified used car will become eligible for benefits that a new car customer enjoys. Perks such as service loan cars, shuttle pick-up and drop-off service, roadside assistance, free maintenance and low-rate "incentive" loans are just a few of the reasons to choose a certified used car over a less expensive used car bought from a private party or used car lot. There's also the added benefit of having your car or truck serviced at your local dealer, which in most cases means a cleaner waiting room with little touches like fresh coffee and more comfortable chairs it's not reason alone to choose a certain car, but it sure doesn't hurt. Even if a specific perk is not part of the official certified program, you can sometimes negotiate additional features with your local dealer dealers selling certified used cars will, by and large, want to treat you the same way they treat their new car customers. Of course they're hoping to earn your new car business at some point, so they have more interest in building a relationship with you.
Some certified used programs offer the option of purchasing even more coverage, but the real value lies in the factory-provided coverage that is included in the purchase price of the car you're considering. Because some cars have a longer initial warranty when the car is purchased new, they represent a better candidate as a certified used car in other cases, buying a certified used car will net the customer a longer warranty than if he or she bought that same car new. The attraction to certified used vehicles is clear new car benefits at a used car price.
Many programs offer perks not directly related to the vehicle itself. For example, some certified programs offer services similar to what an auto club might offer. Services such as trip routing and trip interruption protection are often included as part of the certified program. Trip interruption protection is a feature that will reimburse the owner of a certified used car for incidental costs such as car rental, lodging, meals and out-of-town repair expenses should he or she become stranded due to a warranted mechanical breakdown when traveling out of town usually an owner must be at least 100 miles from home in order to use the service. Some luxury brands will offer such services as trip planning or include a year's worth of subscription fees to in-car telematics services like Lexus Link or OnStar.
So the benefits of purchasing a certified pre-owned car versus a used car from a private party or used car lot are obvious. You have the factory standing behind the certified pre-owned car, plus you'll be buying a car that the original manufacturer has inspected to ensure that it is worthy of certification. The only downside to certified pre-owned cars is that they are generally more expensive than other used cars. But in this case, the benefits may outweigh the cost for many buyers, the peace of mind alone is enough to justify the extra money.