Certified Pre-Owned Cars: Should You Buy One?

A certified pre-owned (CPO) car is more than a used car. Think of it as a used car plus: a late model, low-mileage vehicle that’s been inspected and reconditioned to new-car levels according to the manufacturer’s standards. The CPO designation gives buyers peace of mind — and a warranty backed by the automaker — but you’ll probably pay more for certified pre-owned cars than other used cars.

Are certified pre-owned cars worth it?

If you’re debating between a new or used car, a CPO car is a great third option. You could buy a higher-end brand or trim level for less than the new version of the same car. “You can buy a two- or three-year-old off-lease vehicle and realize some savings,” said Matt DeLorenzo, former managing editor of news at Kelley Blue Book.

With a little legwork, you might find a similar vehicle without the CPO designation and save some money. A certified pre-owned car costs about 3.5% more on average, but the difference may be greater for luxury vehicles, around 7%, according to Black Book. Although certified pre-owned cars are more expensive, many buyers consider the peace of mind of driving a certified vehicle to be worth the added cost.

CPO warranties: What to consider

A CPO’s warranty might factor into your decision, too. Many manufacturers extend a CPO’s original factory warranty. If the car you want has much of its original warranty left plus a year or two of a CPO warranty after that, this could be an advantage.

Read the fine print and make sure you understand what’s covered and what isn’t. A bumper-to-bumper warranty typically covers brakes, steering, suspension and electrical systems but is shorter than the powertrain warranty, which covers the transmission, engine and front- or rear-wheel drive. Warranties backed by the manufacturer should be honored at any of the brand’s dealerships.

These are different from extended warranties, which are sold as add-on products. They may cover expenses factory warranties do not, but watch out for overlapping coverage and varying prices.

If you’re not sold on the CPO concept, you could shop around for a less expensive used car and use the difference to pay for an extended warranty. Or, you could save the cash in a general rainy day fund for when your car needs to go to the shop.

Pros and cons of buying certified pre-owned cars

CPOs are often trade-ins or leased vehicles that have been returned to the dealer. They undergo a multipoint inspection, are repaired if necessary and then are put up for sale. The advantage of purchasing a CPO is that you’re buying a used car that’s been thoroughly vetted rather than a standard car with an unknown past. Keep in mind that manufacturers have different CPO criteria for age, mileage and wear and tear.

Pros

  Nicer vehicle: A typical three-year-old CPO vehicle has fewer miles and is usually in nicer condition than a similar used car, according to Black Book, an industry pricing/value guide.

  Lower risk: The cars have passed a rigorous inspection and have an extended factory warranty, and dealers check to make sure any recalls have been performed.

  Lower APR: Manufacturers offer special APRs for their CPO vehicles, which are often lower than used auto loan rates you might see at banks or credit unions. You might even find 0% APR deals on a CPO car, but you typically need excellent credit to qualify.

  Extras: The manufacturer may offer perks like roadside assistance, free oil changes or a free trial for SiriusXM Satellite Radio.

Cons

  Higher price: A CPO vehicle will cost a few thousand dollars more than a similar used car that’s not certified.

  Fewer buying options: You can only get CPO vehicles from a branded dealership, so your shopping options are limited.

  CPO doesn’t mean perfect: A CPO car can still suffer from problems that commonly plague a particular model, or the dealer may not catch everything that’s wrong. Also, wear-and-tear items like tires aren’t replaced if there’s sufficient life left. You may be on the hook for these the same way you would for any other used car.

CPO deals

If a CPO car sounds like a good fit, manufacturers often offer promotional financing deals or other incentives for CPO cars, much the same way they do for new vehicles. Good credit is required to get the best deals from the manufacturer’s vehicle financing company, which may vary by model and location, so check with your dealer for eligibility and current offerings. We rounded up offers from the top 10 auto manufacturers, as measured by U.S. sales: