CPO Basics: Certified Pre-Owned (CPO) Car Programs
While online searching for a used car, you’ve probably seen ads for used car dealers “certified pre-owned” (CPO) programs offered through dealerships. You may be wish to avoid heading to the dealer—cars for sale by private owners can be found all over Craigslist and other third-party sites—a CPO vehicle can be a good choice for some buyers. Here is a guide that explains the pros and cons of the CPO market.
What Is a CPO Vehicle, Anyway?
Unlike vehicles acquired through a private seller or those purchased from independent used-car dealers, CPO vehicles are inspected according to the manufacturer’s standards and carry a manufacturer-backed warranty that usually extends the length of the new-car coverage. They’re sold through licensed new-car dealers and typically have age and mileage limits, helping to ensure that they still have some pep in their step when you take the wheel. CPO vehicles are important to automaker revenue, with the programs showing several years of annual growth—and several more expected after. The programs offer dealers a chance to make money again on what they’ve already sold once, a choice any salesperson would be foolish to turn down.
What Are the CPO Benefits?
Buying a two-year-old CPO vehicle typically saves buyers about 25 percent versus the cost of a brand-new model. Four-year-old CPO models are often marked down by as much as 40 percent compared with new and, unlike most used vehicles, some CPO cars now offer leasing as an option through certified dealerships. Leasing a CPO vehicle should substantially lower the monthly payment. CPO vehicles also offer customers some peace of mind in a market where they are otherwise expected to trust not to lie about the condition of the vehicle. Every CPO program evaluates its vehicles using a manufacturer-specific checklist, most of which encompass approximately 150 points. And nearly every program provides a vehicle-history report as proof that the car has led an uneventful life. It’s a good idea to ask the dealer for a copy of the program’s CPO checklist to get an idea of what they’re looking for.
Consider that CPO cars also feature a manufacturer-backed warranty. The details for each manufacturer’s CPO warranty vary, but as a general rule, such warranties act as an extension of the factory warranty but offer slightly less coverage. And whereas a factory warranty and some CPO warranties have no deductibles, some companies will charge $50 to $100—or more—to perform covered repairs. Still, these CPO warranties can offer peace of mind and can save you bundles of cash in the event of a major repair. Some CPO warranties use the vehicle’s original in-service date as a starting point, while others begin at the end of the new-car warranty or on the date of the CPO purchase. Coverage periods vary by automaker, but even the stingiest plans will net you a total of about six years or 80,000 miles of coverage from the date of the car’s original sale. Coverage lasts for the allotted number of years or the allotted number of miles, whichever comes first. Some brands, mostly those among the supercar set, provide coverage for a period of years along with unlimited mileage.
Examine the Fine Print
Many CPO programs divide their coverage into a powertrain warranty that covers the powertrain (the engine, transmission, and other major components) and a limited warranty for any other components the manufacturer chooses to cover. Component coverage varies among brands, with some programs covering audio systems and climate control while others stick to the mechanical bits on the chassis and under the hood. Normal wear items such as brake pads and exterior paint are almost never included in the warranty, unless the damage is the result of a manufacturing defect. Electric vehicles or vehicles with hybrid components may be excluded from some programs or receive reduced warranty coverage, and vehicles with aftermarket parts or entered on racetracks are often completely excluded from CPO programs. Having repairs done outside the manufacturer’s dealer network or even missing a scheduled maintenance visit can be enough to void a CPO warranty.
Read everything before you sign.
If a newly acquired CPO vehicle does happen to break down in one of the covered ways, you will be pleased to hear that most programs include access to 24-hour roadside assistance in the form of towing, flat-tire assistance, fuel delivery, and jump-starting. You’re also likely to get reimbursement for any rental cars necessitated by a long repair, and if you happen to get stranded far from home, some will reimburse you for unexpected travel expenses.
Which CPO Vehicle Right for You?
Purchasing a CPO vehicle will be more expensive than buying from a private seller or buying a non-certified used car and then purchasing a third-party warranty, but there are many benefits beyond those we’ve already discussed. Many CPO vehicles were lease cars, which can translate to low mileage. And even though most are only a few model years old, CPO cars are reconditioned before being offered for sale, so they approximate the new-car experience without the massive initial depreciation.
Buyers searching for a very specific vehicle or one with a unique configuration may do better to find a private seller. Luxury-car buyers, can benefit greatly from CPO programs, which mitigate the higher repair costs of those vehicles and ensure you’re getting a used vehicle in like-new condition.
With this CPO knowledge, find yourself a new used car to drive and have fun doing it.