Certified Pre-Owned Cars
Don't rule out buying a certified pre-owned car. You will find these cars at dealerships, and if something goes wrong with one of them within the period of the certified warranty, it will be fixed for free. It's important, though, to shop for a "factory certified" pre-owned car rather than one on an independently owned used car lot that simply slaps a "certified" sticker on the window. Always know who is certifying the car's condition and providing the warranty.
If a factory-certified vehicle appears to be in good condition, you don't have to do a complete mechanical inspection to make sure it will be reliable. Do keep in mind that warranties don't cover everything. Parts that wear out, such as brake pads, tires and windshield wipers, typically aren't covered.
Take Volkswagen, for example. Its certified used cars have to pass a 112-point inspection. VW then adds a two-year/24,000-mile limited warranty that includes roadside assistance. At Edmunds, we once bought a certified used 1999 VW Passat GLS that overheated only four months later. The repairs (not extensive) were covered by the warranty.
You'll pay more for this peace of mind, though. According to Edmunds data, the average 3-year-old CPO vehicle is 5.8 percent more expensive than a comparable non-certified car. So while CPO vehicles are not necessarily as much of a bargain when you buy them, they can provide peace of mind and be a better value over the long term.
Used Cars Still Under Factory Warranty
Late-model used cars can be great bargains, because someone else has already taken the biggest depreciation hit. New cars are sold with warranties of varying years and mileage limits, with the minimum being a three-year/36,000-mile bumper-to-bumper warranty. So if you buy a car that is a year old with only 15,000 miles on it, you'll still have, at minimum, two years and 21,000 miles remaining on the warranty. And if anything covered by the warranty breaks down, the problem will be fixed for free.
The vast majority of bumper-to-bumper warranties are transferrable to subsequent owners. But the long-term powertrain warranties from some automakers only apply to the original registered owner, so the coverage is invalid if the car is resold. In addition to Edmunds' list shown above, most automakers' Web sites list the details of their warranties, so check those for more information.