Certified Pre-Owned Vehicle Programs

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. "Factory Certified" refers to used cars that are offered for sale by your local dealer with the support of the vehicle's original manufacturer, with warranties that extend beyond the initial coverage. The original manufacturer of the vehicle is using their dealer network to inspect the car, determine if it is worth certifying, then offering support for the vehicle for a period of time beyond the original warranty. 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 do not stand behind the "warranty" in any way. In fact the term "warranty" may be misleading as third-party warranties are really extended service contracts. A true warranty offers coverage that is included in the original purchase price; check out our "Understanding Extended Warranties" article for more information on aftermarket service contracts.

The downside to third-party service contracts is that they often obligate the customer to pay for needed repairs up front, 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 is not around to honor the warrany when a claim is made — this risk is much less when the responsible party is a vehicle manufacturer.

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 can be one of many reasons to choose a certified used car over a less expensive used car bought from a private party or generic used car lot. Even if a specific perk is not part of the official certified program, you can sometimes negotiate additional features with your local dealer. Many certified programs will even offer longer warranties at an additional cost, but the real value lies in the factory-provided coverage that would be 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 therefore 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 such as trip routing, and trip interruption protection. 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 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. The rules and dollar amounts vary from brand to brand, so check with your local dealer for the specific details