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benefits of Certified Pre-Owned vehicles

What are the benefits of Certified Pre-Owned vehicles?

What is a CPO? And what are some of the benefits of Certified Pre-Owned vehicles? Why do they cost more than regular secondhand cars? And is that bump in price justified?

You’ll find answers to all these questions below plus tips on how to get your hands on some of the best Certified Pre-Own car deals on the market. Let’s dig in.

What is a CPO?

A Certified Pre-Owned car is a secondhand car that’s gone through a multiple-point inspection and reconditioning process during which certified mechanics have inspected its engine, transmission, battery, and tires, plus a sleuth of other minor details. In theory, all discovered issues are fixed, otherwise the car doesn’t get the CPO (Certified Pre-Owned) stamp of approval.

Not all used cars can qualify to become a CPO, though. Even though the details differ from one program to the next, for a car to be considered a Certified Pre-Owned candidate, it must meet age and mileage restrictions.

Audi models that are considered eligible for certification by the manufacturer must be at most 5 years old and have no more than 60,000 miles on their odometers. With Cadillac, the restrictions are even tighter, with eligible cars 4 years old or newer and with less than 50,000 miles registered.

Before we get into the details of what the Certified Pre-Owned badge entails, we must address the fact that not all certifications are equal. As dealers saw the appeal of manufacturer-certified vehicles in their clients’ eyes, and the better prices they commanded, they began offering certification of their own, often by diluting the term to stand for lesser benefits. But, of course, without diluting the prices. 

Every time you see a “certified” label on a car, immediately ask yourself, “Certified by who?”. The answer makes a world of difference since certification can come directly from the manufacturer (the best kind), from the dealership, or from a third party.

Every entity that certifies a vehicle is free to define that distinction however they see fit. In this article, we’ll mainly cover manufacturer-backed certification because it comes with the biggest benefits and offers the best value for money.

What does a CPO include?

Even manufacturer-backed certification varies from one brand to another, but they do follow the same blueprint. Below we talk about the benefits of certified pre-owned vehicles and what it takes to become one.

Age and mileage limitations

All manufacturer certifications come with age and mileage limitations. This is to ensure that the vehicles are still in a generally good state and to help lessen the burden of future repairs on the manufacturer’s dime.

The limitations vary quite a bit, depending on the manufacturer. You have:

  • Audi Certified Pre-Owned eligibility: 5 years old or less, no more than 60,000 miles
  • Chevrolet Certified Pre-Owned eligibility: 6 years old no more than 75,000 miles
  • Hyundai Certified Pre-Owned eligibility: 5 years old or less, no more than 60,000 miles
  • Mazda Certified Pre-Owned eligibility: 6 years old, no more than 80,000 miles
  • Mercedes Certified Pre-Owned eligibility: 6 years old, no more than 75,000 miles
  • Porshe Certified Pre-Owned eligibility: 13 years old, no more than 123,000 miles
  • Subaru Certified Pre-Owned eligibility: 7 years old, no more than 100,000 miles
  • Toyota Certified Pre-Owned eligibility: 6 years old, no more than 85,000 miles

There are also outliers with brands such as Tesla that have no limitations for their Certified Pre-Owned eligibility and brands that offer multiple CPO programs such as Ford with:

  • Ford Gold Certified eligibility: 6 years old or less, no more than 80,000 miles
  • Ford Blue Certified eligibility: 10 years old or less, no more than 150,000 miles
  • Ford EV Certified eligibility: 6 years old or less, no more than 80,000 miles

Warranty

The warranty you get also differs from one CPO program to the next, and quite massively, even if you stick to manufacturer-backed Certified Pre-Owned vehicles alone. If you’re to consider direct dealership certification programs, then the differences are massive and, the worst part is that they are also likely restricted to a specific dealership or chain. Whereas with manufacturer CPO programs, you can use your warranty at any of the brand’s licensed dealerships across America.

Here are a few examples of what you can expect from a warranty that comes with a manufacturer-backed CPO car:

  1. Chevrolet CPO cars come with a warranty for the powertrain of 6 years or 100,000 miles from the original in-service date plus a bumper-to-bumper warranty for 1 year or 12,000 miles.
  2. Hyundai CPOs come with a powertrain warranty for 10 years or 100,000 miles from the original in-service date plus a bumper-to-bumper warranty valid for 5 years or 60,000 miles from the original in-service date.
  3. Lexus offers a comprehensive warranty for 2 years and unlimited miles with their CPO vehicles.
  4. Mercedes CPO cars come with a comprehensive warranty that’s valid for just 1 year but with unlimited miles.
  5. Mitsubishi has one of the best warranty programs available. If you buy a Mitsubishi CPO, you’ll get a powertrain warranty valid for 10 years or 100,000 miles from the original in-service date, plus a bumper-to-bumper warranty that will last for five years or 60,000 miles from the original in-service date, plus seven years or 100,000 miles of anti-corrosion/perforation coverage.
  6. Tesla, on the other hand, has one of the poorest warranties out there with their CPOs being offered just a bumper-to-bumper warranty for just 1 year or 10,000 miles.

There are no restrictions on what a warranty fit for a Certified Pre-Owned program should cover and for how long. As you can see above, the manufacturer decides on the details and the differences between programs are immense.

Multiple-point inspection process

Although different from brand to brand, all manufacturer CPO programs center around a multiple-point inspection process. Moreso, the inspection is done by brand-certified mechanics (so Ford-certified technicians inspect Ford vehicles exclusively, and Honda-certified technicians, stick to Hondas) in brand-certified service and repair shops that belong to brand-authorized dealers.

This brand-centered approach is a huge benefit for prospective buyers since it offers the best expertise for inspection. Let’s take Ford as an example. If you’re looking to buy a Ford-certified Pre-Owned Ford F-150, then what you’ll get is a truck that’s been inspected by Ford-trained and -vetted mechanics, in a Ford-approved facility, following the manufacturer’s procedures and best practices. 

Reconditioning

If, during the inspection process, irregularities or damages are found on the CPO candidate, they need to be corrected to a satisfactory degree for the vehicle to qualify as Certified Pre-Owned.

Although this process almost always addresses just minor details, it still means that you’ll be spared some expenses and trouble. More importantly, though, it means that cars with major damage simply can’t qualify as CPOs, keeping you safe from one of the worst scenarios possible when buying a second-hand car – a complete money pit that always needs repairs to function. 

History check

Probably the very first thing a dealer does when they look at a CPO candidate is to check its history. CPOs can’t be formerly stolen cars and they can’t have gone through big accidents or title-changing damages such as those caused by a fire or a flood.

Special-terms financing

Many buyers don’t realize that the total price of a car is not just the price demanded by the seller. In reality, what buyers end up paying is the car’s initial price + taxes + interest + fees. If the taxes & fees can be estimated to be roughly 10% of the car’s value, the interest you end up paying on your financing can vary tremendously. And it can also add up.

1% less on your interest rate and you could be saving thousands of dollars by the time you pay off your car. Certified Pre-Owned vehicles often come with special financing that offers some of the best APRs on the market, so good in fact that it could significantly lower the financing costs to the point where you either save big or you’ll be able to afford a better trim/model for the same monthly fee.

Extra bonuses

On top of everything listed above, brands also tend to offer some kind of bonus with their Certified Pre-Owned vehicles. Most offer roadside assistance and some programs will also net you transferability, a free car history report, satellite radio free trials, and even no deductibles for warranty-covered repairs.

Pros of CPOs

Because CPOs are relatively new used vehicles, you can compare them with both second-hand cars as well as new ones. 

It’s true that Certified Pre-Owned cars come with a bigger price tag, but the difference between them and regular used cars is estimated at roughly 4%. For many, the unique benefits of a manufacturer-certified second-hand vehicle far outweigh the relatively insignificant bump in price. Let’s take a detailed look at what those benefits are.

Warranty

If you’re thinking of buying certified used cars, then you’ve likely been convinced by their warranty programs. As we demonstrated earlier, the warranties that are included with Certified Pre-Owned programs are very different depending on the manufacturer. You could be getting two to three types of warranties that span as long as 10 years or just a simple coverage for a single year.

Take your time and study your options to figure out which are the best certified pre-owned car deals on the market. A CPO’s biggest benefit is the extra peace of mind it’s able to provide its buyers with, and that largely comes from knowing that you’re covered no matter what the future brings.

Far lower depreciation rate

On average, a car will lose between 15 and 20% of its value in the first year and then roughly 10% annually thereafter. Depreciation is a natural phenomenon and it cannot be stopped. So, why choose certified pre-owned cars?

If you think about it, buying a car that’s just 3 years old, will save you from having to register a 35 to 40% drop of its value. That being said, a car with just 3 model years under its belt is still a very modern car with modern tech and comforts. Having gone through the mandatory inspection and reconditioning processes, it’s also likely that you’ll get a car that’s in great condition. At the end of the day, you get a slightly older model, but you save up to 40% on what the car would have cost brand-new. 

Relatively new vehicle with low mileage, in good condition

All manufacturer-backed CPO programs have limits on the car’s age and mileage. Sticking to newer, less-driven used cars is a great way to ensure that the vehicles are still in good condition. A car that’s just 4 years old and has less than 40,000 miles on its odometer will have significantly less wear and tear than a 10-year-old model that’s passed the 200,000-mile mark.

Inspection + reconditioning processes

Every Certified program boasts about its thorough inspection and reconditioning processes. Even though you shouldn’t take them at face value, and it’s best to do your own inspection before purchasing any used car, the fact that certified mechanics have looked at these vehicles is definitely an added layer of safety.

Free vehicle history check

Almost all manufacturer-backed certifications are accompanied by a vehicle history report. Companies such as Carfax and carVertical offer extensive information in their reports about a vehicle’s past. You can find out about the car’s registered damages, past odometer readings, theft records, etc.

Obtaining a vehicle history report is vital when buying a used car and since CPOs tend to already have them, it’s something that you don’t have to pay for anymore.

Likely nothing horrible in their past – no major accidents, no theft records, and no bad titles

Because most manufacturer-backed Certified Pre-Owned cars have history reports and usually have a single previous owner before being sold as CPOs, the likelihood of you encountering some of the most horrible scenarios involving used cars is exceptionally low.

Used cars can be on the market because they have been stolen, or because they have been involved in a horrible accident and are unsafe to drive anymore, even after repairs. They can also have had their titles changed recently.

In all these potential scenarios you’d end up losing a lot, if not all of your money. A CPO is a safe option that keeps you away from the worst deals on the market and from being conned.

Better financing – that adds to the discounted price tag

Almost all Certified Pre-Owned vehicles guarantee that you’ll get better financing terms than for a regular, similar used car. 

Many manufacturers offer special financing for CPOs. Here are just a few examples:

  1. Lexus is offering financing at 5.75% for up to 72 months for selected models
  2. Infiniti has 5.49% financing for up to 36 months on some of their CPO models
  3. Honda entices buyers with an exceptional offer of 2.99% financing for a limited term on four of its models (the Accord, Civic, CR-V, and Pilot)

Even if the manufacturer doesn’t offer special financing for their CPOs, most traditional banks, credit unions, and online lenders will better their offers for a Certified car instead of a regular second-hand one.

How to get the best CPO deal

Like with all second-hand cars, the difference between an ok and a great CPO deal comes down to the buyer’s involvement and understanding of the market. These are out 6 tips to help you secure the best deal whenever you’re shopping for a Certified Pre-Owned vehicle:

  1. Check what type of warranty you’re being offered and by whom

The quintessential benefit of certified pre-owned vehicles is the warranty they come with. As we’ve seen throughout this article, manufacturers aren’t offering a standard warranty across the market, quite the opposite. There are huge differences between brands and there is a huge difference in coverage between manufacturer-backed certification and dealership-backed, or third-party-backed certification.

The best Certified Pre-Owned car deals include a warranty directly from the manufacturer. 

  1. Know the market and negotiate

CPO prices are not set in stone, you can negotiate them. To increase your chances of bringing down the asking price, all you have to do is look at the current state of the market. For how much do other similar models go for? Are you in a buyer’s or a seller’s market? What are the most common problems other owners had to face with the model that you’re interested in?

The more you know about the current prices and about the car model that you’re looking to buy, the better your final price will be. Give yourself at least two weeks to do some research before you step foot into a dealership.

  1. Test the vehicle

One of the most common mistakes buyers make when opting for certified cars is to not test them. CPOs might be the crème de la crème of used vehicles but at the end of the day, they are still second-hand cars and due diligence is vital to ensure that you’ll get a good deal.

If you’re looking to buy a CPO, at the very least take them out for a test drive and ask to see both their inspection and history report. It wouldn’t be a bad idea to also inspect the car yourself or pay a mechanic to do it for you. Often times the inspection process certified cars go through is superficial to say the least, especially when it comes to anything other than manufacturer certification.

  1. Ask for bonuses – they add up to the value of your purchase

Many Certified programs come with added bonuses such as free servicing for a period of time or free roadside assistance. Simply do an online search of what other buyers were offered so you know what to ask for yourself. Make sure to ask for bonuses at the very end of the negotiation, once you’ve settled on a price that’s good for you. This way you won’t run the risk of dealerships factoring in these perks in the final price, effectively making you pay for the bonuses that should be free.

  1. Inquire about preferential financing

Again, a step that should be held until after you’ve finished negotiating the price of your certified pre-owned car, inquiring about preferential financing can save you thousands of dollars over the course of your car loan. Most brands offer special financing conditions for their CPOs through their authorized dealers. Even banks and credit unions can look favorably at financing certified used cars – they will likely offer you better rates than they would for a regular second-hand car.

  1. Ask to get a copy of the inspection and history reports

A simple step that can help you a lot in the future when you’re ready to sell the vehicle. If you have a copy of both the inspection and history reports, you can pass them on to the next buyer as proof of a good car. Doing so will reduce the time it takes to find a buyer and you’re likely to get a better offer for your car if you can prove it’s been in good shape even before you purchased it.

Conclusion – is it worth buying a Certified Pre-Owned car?

The short answer is yes, especially if you have little to no experience with buying secondhand cars. The benefits of certified pre-owned vehicles (manufacturer-backed warranty, better financing, free vehicle history report, the inspection and reconditioning processes) outweigh the small bump in price Certified Pre-Owned vehicles register when compared to normal used cars.

FAQs

Is a certified pre-owned car worth it?

For most used car buyers, yes it is. If you are an experienced car buyer, a gearhead, or a professional mechanic, then you’ll likely be able to find a solid, reliable used car on your own. And since CPOs are a bit more expensive than simple used cars, then maybe Certified Pre-Owned cars aren’t for you. Regular buyers, though, would benefit from the layers of added safety a CPO comes with in the form of extra warranties and inspections.

Can I get a car history report for a certified pre-owned car?

Of course, you can. You can obtain a vehicle history report for any used car, regardless of whether it’s certified or regular.

How are certified pre-owned vehicles different from regular used cars?

CPOs are the crème de la crème of used vehicles. They tend to be relatively newer models, with low mileage, and they undergo an extensive inspection and reconditioning process. They also come with a set of possible warranties and extra bonuses such as special financing or free roadside assistance.

Are CPOs recommended for first-time used car buyers?

Certified cars are highly recommended for inexperienced buyers because they offer the best combination of safety and affordable pricing. Not to mention that most Certified Pre-Owned programs only include newer and less worn-out models, so the selection is quite good from the get-go.

Are all “Certified” Pre-Owned programs the same?

Not at all. Certification criteria and benefits differ greatly from one manufacturer to the next. And there is a big difference between a factory-issued certification and a dealership-backed CPO.

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