Why Is Buying a Certified Pre-Owned Vehicle Important?

by Scott | Apr 29, 2019

Buying a used car can be stressful, confusing, and at times overwhelming. Words like "used", "pre- owned", and "Certified Pre-Owned" all mean that you are getting a model that is not new, but they vary dramatically. The more you know going into the process, the easier it will be. You may have come across the term "Certified Pre-Owned Vehicle" or "CPO", but may not fully understand what that entails or what it means for you. We are here to help explain what you can expect from a certified pre-owned vehicle, and help you decide if they are what you are really looking for.

First, it is important to understand that the process of how a vehicle becomes a certified pre-owned model. When a vehicle is purchased by the dealership, it undergoes an extensive inspection from bumper to bumper and from the tires to the roof. Everything from the brakes and suspension to the power controls and accessories are tested, so the dealership knows exactly what is wrong, what can be fixed, and what needs to be sold "as is". Only the vehicles that meet the highest standards are then labeled as a "Certified Pre-Owned Vehicle".

Who Certifies Each Vehicle?

Essentially every single major dealership has some kind of certification process for their used models. Each dealership will call their programs something different, but the names all imply that their used models are inspected and vetted to ensure the highest quality and top performance. The service department at each dealership then inspects the incoming used models to see if they meet the standards set by the dealership.

What Can I Expect from A CPO?

Certified Pre-Owned Vehicles are typically low-mileage models that are between 5-7 years old or newer. Very often they are lease returns, models traded in for an upgrade, or a vehicle from a loaner program. These models will typically come with specially financing offers, extended warranties, and other perks like roadside assistance and free satellite radio for a period of time. You can expect to get a relatively new model, that has under 75,000 miles. Often these models will be accident free, or have had very little to no damage ever reported.

The idea of the CPO program is that you are getting a "used" vehicle, that has an extremely clean history, has a powertrain that has already been broken in and tested thoroughly, and that is heavily backed by the automotive manufacture or dealership in which you purchased it from.

Manufacture warranties that accompany CPO models tend to be more encompassing than warranties from a private dealership or private seller. Part of this is due to the very stringent inspection that CPO models undergo. CPO extended warranties tend to be longer, protect more, and be of a higher value overall. However, this can also be one of the downsides to a CPO model. They can be the most expensive used-car buying option.

Are There Any Downsides to Certified Pre-Owned Models?

Of course, a CPO model may not be perfect for everyone. Anything that is newer and has a higher guarantee of running longer is going to cost more. Buying a Certified Pre-Owned model will almost certainly cost more than buying from a private seller for example. After all, you are paying for the inspections and history report. Another slight downside is that all dealerships set their own standards for what makes a vehicle "Certifiable", and therefore you may not be comparing vehicles of equal quality when you are comparing from different manufactures’ dealerships. You are going to want to ask questions about their certification process. Find out what they inspect, and how deeply they inspect it.

Also keep in mind that manufacture dealerships are backed by the company itself, and tend to have the strictest certification processes. These service departments also tend to have specialized technicians that know more about the brand of car you are potentially buying. When compared to a privately- owned used car dealership, their certification processes tend to be more generic so that they can cover more makes and models of vehicles. If you are considering buying a vehicle from a used car lot or private seller, you may want to get another pre-purchase inspection performed by a third-party technician.

Depreciation: Why You Should Buy Used

Used or pre-owned vehicles have already experienced depreciation, meaning the quick loss of value that happens after a brand-new vehicle is purchased has already occurred, and that someone else paid that price. Depreciation can be as much as 20% of the vehicle’s initial cost lost in the first year of ownership. This is because the vehicle is a perishable asset that loses value over time, and depreciation rates account for that wear. Depreciation rates vary by make and model, depending on the overall value and estimated lifespan of the vehicle.

Even after the first year, new models can depreciate up to 10% per year for the next few years of its life. This has to do with market trends, the type of vehicle you own, and inflation rates. Eventually, those depreciation rates will slow down and even out. By waiting for the right time and age of the used model, you are now only responsible for the true value of the vehicle. This makes them cheaper and more affordable for those who don’t necessarily need a brand-new car.

Tips for Buying Your Next Car

Always start by calculating your budget, and making sure you know what you can afford as a maximum monthly payment. Aim to buy a model that going to cost less than your maximum, so you can potentially pay it off sooner or save up for repairs and maintenance. Use the online tools available to calculate what the models you are looking at will cost you. This way you have an idea of what models you should be looking for, and if you are in a position to afford a CPO model over a used model.

If you are on the fence about choosing a certified pre-owned model, you may want to weigh your options. There are alternatives to fancy and extensive warranties if you are wanting to save a few bucks and are willing to deal with any unexpected circumstances yourself. There are many used models on the market that hold extremely high values and are just as good as their certified pre-owned counterparts. If you are fine with assuming the risks of not having a warranty, then it may be beneficial to avoid these options. However, CPO models do provide peace of mind for those who want reliability and manufacture backing.

Certified Pre-Owned vehicles are among the best used models you can buy. They are going to give you more purchase protection, potentially last longer, come with the best warranties, and often have extra perks. Remember, if you are not comfortable with the level of inspection a model you are considering has undergone, you can always choose to get another pre-purchase inspection done by a third party. Though, the likelihood of you needing a third-party inspection with a CPO model is very slim.