Car Buying Options: Certified Pre-Owned?

by Mark Elias | May 3, 2016

Let’s face it. Everyone enjoys a bargain, and in the automotive world, there are plans in place that allow bargain hunters wanting a specific car to take advantage of a gently used vehicle that is as luxurious as new, at a lesser, pre-owned price point.

Most Certified Pre-Owned cars are off-lease vehicles that have been turned in at the end of a lease term and the owners have decided to walk-away from buying the vehicle outright. But one’s walk-away can be another person’s bargain.

Dealer vs Manufacturer Certified Pre-Owned cars.

There are typically two types of Certified Pre-Owned (CPO) programs. The first is a dealer certification program that ties you to a particular dealership where you bought the car. In most cases, a general inspection occurs and a dealer will offer a warranty policy that will be more in-line with an extended warranty. In that case, that specific dealer will warrant the vehicle (unless the warranty is part of a national network) for a specific time and / or mileage. For purposes of this article we are not talking about this type of program.

The second and more advantageous of the two is the manufacturer’s Certified Pre-Owned program. In this situation, vehicles receive a thorough seeing-to using a multi-point (150+ point) checklist that inspects, and in most cases repairs items on the vehicle to bring them up to manufacturer’s standards. The end-results hopefully guarantee a happy customer and help to maintain a brand’s reputation. Some even come with loaner vehicles while that car is in for service.

It is also typical that you will only find a particular dealer’s main brand in their CPO lots. Don’t expect to arrive at your local Mercedes-Benz Previously-Owned lot to find a Cadillac CTS-V or Audi A7. At this point, most brands offer CPO cars, with the exception being exotic manufacturers who tend to shy away from such. They include makers like Aston Martin, Ferrari, Lamborghini, Bugatti, Lotus, Rolls-Royce and Tesla.

The larger the pool, the better the selection.

Bigger markets such as Los Angeles, Chicago, South Florida, or other major metropolitan areas will have a larger pool of cars from which to choose from. In the case of JM Lexus, near Fort Lauderdale, Florida, they claim about 90-percent of their "sales" are leases. As a result, there is a strong turnover of each model year, generally two or three years later, as the terms of those leases expire. Those cars can be leased again, as CPO program cars, warranted by Lexus.

According to Brad Schafer of JM Lexus, the new car lease payment for the first two or three years is essentially covering the car’s depreciation. When the car returns at the end of its lease term, it is a low-mileage, well-kept, gingerly used car. It’s at this point the dealership cherry-picks the best of the best to become part of Lexus’s L/Certified plan. Other cars that do not meet those standards as set by Lexus might end up in the dealership’s value-priced lot or sent to auction.

What's covered?

While not identical, companies offering certified purchase programs have similar standards or quality thresholds that the cars must meet to qualify. Some of these standards are in age and mileage limitations. Parameters may vary but a typical candidate will be newer than six-years-old and with no more than 70,000 miles on the odometer.

The certified vehicle will be warranted by its manufacturer. In the case of Lexus, a CPO vehicle is covered for six years from the first date of service, when the car was sold as new, and whose coverage will terminate at 100,000 miles, whichever comes first. In a general situation that would give the CPO purchaser a warranty of at least three-, and possibly four-years of time, and based on 24,000 miles during the lease, up to an additional 76,000 miles of warranty. The brand also includes complimentary two-years or 20,000 miles of scheduled maintenance from the day the vehicle is purchased by the CPO buyer.

Following a car’s extensive inspection, parts needing repair will be replaced. Pieces such as door locks, window regulators, gauges, controls and others that may malfunction will be changed in favor of new pieces to good working order. Tires must meet certain standards, and the next scheduled interval service must be performed. For example, if a car comes in with mileage of 29,000, and will soon be due for its 35,000-mile maintenance, the dealer will perform that service.

Hyundai is another brand to offer CPO coverage and purchase options for buyers of "gently-owned" vehicles. In the case of this manufacturer, buyers can take advantage of the remainder of the Hyundai 5-year/60,000 mile bumper-to-bumper warranty and the 10-year/100,000-mile powertrain coverage from the original date of purchase. Hyundai’s website details how the brand goes even further with the addition of roadside assistance, rental car reimbursement and travel interruption insurance for covered repairs.

Compelling reasons.

There are many compelling reasons to consider a Certified Pre-Owned vehicle for your next car. The goal of such extensive inspection and repair is to provide zero risk to the customer. To find out more, check out the cars of your choice on their manufacturer’s certified pre-owned website.

CPO cars come with a higher level of reassurance, but they, like all cars, and the people who drive them, are not perfect.