Are Certified Pre-Owned Cars from Dealers Worth the Price?

In recent years, certified pre-owned (CPO) cars have gained traction among car buyers, with about 2.6 million such vehicles sold in the United States in 2023. This figure is up by 6.6% from the CPO car sales recorded in 2022.

CPO cars offer prospective vehicle buyers many of the advantages a new car brings while allowing them to avoid paying the premium costs associated with brand new vehicles. Certified pre-owned cars provide owners with the assurance of a thoroughly inspected and reconditioned vehicle meeting manufacturer standards. Unlike regular used cars, which may come with unknown histories and no guarantees, CPO cars undergo a rigorous certification process, often accompanied by manufacturer warranties, making them an attractive option for persons looking for reliability without the price tag of a new car.

What Are Certified Pre-Owned Cars?

A certified pre-owned (CPO) car is a used late-model vehicle that has undergone a thorough and exhaustive inspection process and refurbishment. The aim is to give it reconditioning and a factory-backed warranty, bringing it back as close as possible to a like-new state.

For a vehicle to be tagged as a certified pre-owned car, it must pass an inspection checklist of between 150 and 174 points. Most car manufacturers have CPO programs with strict guidelines requiring multipoint inspection by factory-trained technicians. Although the specific items inspected before certifying a pre-owned car vary from one CPO program to another, most inspections typically involve a review of the following:

• Paperwork and History: Usually, a background check is the first check on a vehicle considered for certification. This step helps review the vehicle history and maintenance records for previous accidents or collisions, flood damage, or stolen vehicle alerts. Once a car passes this initial review, more serious assessments may occur.
• Mechanicals: An approved technician or mechanic will take the car for a drive to identify obvious and hidden mechanical issues. This rigorous procedure will include a thorough inspection of the transmission, engine, braking, suspension, and other units in the car to determine if repair, retuning, or replacement is required. The findings of the auto mechanic go a long way in deciding whether a vehicle will be accepted into a CPO program.
• System: In addition to inspecting major car components, other systems, such as infotainment, seating, safety, lighting, and instrumentation, will be checked for proper functioning. If the CPO program involves a dealership (not all CPOs are manufacturer CPOs), the dealership will also check that the car retains its original keys, manuals, and other necessary documentation.
• Appearance: A vehicle’s inspection for inclusion in a CPO program will not be complete without proper inspection of its interior and exterior. If refurbishments or repairs are needed to bring the car back to a like-new condition, they will be undertaken by professionals to ensure the vehicle looks as new as possible.

Purchasing a certified pre-owned car offers significant advantages, one of which is peace of mind. Whether you buy a used or CPO vehicle from a dealership, you are assured of a high-quality car. However, a CPO vehicle goes further by providing the added security of a comprehensive inspection and an extended warranty.

This warranty often surpasses standard coverage, potentially including additional benefits such as roadside assistance and prepaid maintenance services. Furthermore, any remaining new car warranty on the vehicle typically continues to offer protection, adding another layer of security.

CPO vehicles must meet strict age and mileage criteria to earn their certification, ensuring you purchase a relatively recent model with low mileage. This typically translates into a vehicle that offers greater longevity and reliability than non-CPO cars, which may be older and have higher mileage.

Benefits and Warranty Coverage of CPO Cars

The warranty provided with a CPO car is one of the biggest selling points of purchasing a certified pre-owned car, as it is an actual warranty from the car manufacturer coming as part of the purchase and covering repairs. When buying a traditional used car, the dealer typically handles the inspection and any necessary repairs rather than the manufacturer. If you want warranty coverage and the original manufacturer’s warranty has expired, you will need to purchase an extended warranty or vehicle protection plan. This functions like an insurance policy, requiring an upfront payment for coverage and a deductible when you need repairs.

Some CPO programs offer certain perks that enhance the ownership experience, such as roadside assistance. Some programs even provide complimentary maintenance services, adding further value to your purchase. Some CPO programs often include trip protection and concierge service benefits for buyers purchasing luxury CPO cars. These features ensure that owning a certified pre-owned car delivers a premium experience, making you feel like a valued and distinguished customer.

Are Certified Pre-Owned Cars Worth It?

If you are purchasing a used car and cannot decide whether CPO cars are worth it, you may want to weigh the costs and benefits of opting for a CPO vehicle or a traditional used car.

• Costs and benefits: While CPO cars are pricier than traditional used cars, the benefits of such vehicles outweigh the price difference compared to traditional used cars. CPO cars have undergone a rigorous inspection to test key components for optimal functionality. This assures buyers that their vehicles are unlikely to fall apart or develop critical issues suddenly. Also, most car manufacturers offer a minimum of one year of basic coverage under their warrant coverage and a powertrain coverage stretching beyond the initial mileage limits. These benefits add further value to purchasing CPO cars that may be unavailable with traditional used cars.
• Long-term ownership benefits and savings: The warranty and rigorous inspection CPO cars undergo before being certified help buyers make long-term savings that may have been expended on unexpected repairs or other maintenance activities. Other CPO car perks like roadside assistance may also prevent out-of-pocket expenses throughout ownership. The savings from the benefits associated with CPO cars can offset the premium paid to own them.
• Depreciation and Value: Once a new vehicle is driven off the lot, depreciation sets in. This depreciation becomes significant over the first few years of ownership. In comparison, CPO cars have already experienced depreciation before they are inspected and certified for CPO programs. This process helps them retain their value better over time by giving off a “mid-cycle” refresh vibe that reduces the perceived and actual depreciation in vehicle components, systems, and financial value.

Potential Drawbacks of CPO Cars

Cost remains one of the major drawbacks of buying a certified pre-owned car. Buying a CPO car will cost you more than paying for a standard used vehicle since the certified car would be as close to brand new as possible. The higher fee is linked to the inspections, reconditioning, and warranty. Consequently, the premium required for CPO cars may not always align with the budget of prospective used car buyers.

Another downside of purchasing a CPO car is the limited options for certified pre-owned cars. Car manufacturers set specific conditions and have massive checklists that must be ticked off before vehicles may be accepted in their CPO programs. The rigorous eligibility and selection process makes it more challenging to find a CPO car matching the exact preferences of prospective used car buyers. Hence, buyers insisting on CPO cars may have to compromise on specific options, such as color and trim options. This may cause them to wait longer to find their choice cars or buy non-certified pre-owned cars.

Furthermore, CPO inspections are not always foolproof. Although the inspection and certification process for CPO cars is geared towards ensuring certified vehicles meet high standards, some issues may be overlooked by error. Also, the thoroughness of the certification process varies from manufacturer to manufacturer, meaning that warranties may not cover some vehicle damage types or faults. Therefore, if you want to buy a CPO car, consider carefully reviewing the terms of the manufacturer’s CPO program, including the coverage offered. Some car buyers may prefer a non-certified used vehicle rather than a CPO car if they are uncertain about the limitations and exclusions in the terms provided by a car manufacturer under their CPO program.

Tips for Buying a Certified Pre-Owned Car

The steps involved in buying a CPO car are similar to those for purchasing any other car type. The first step is to know what kind of car you want and conduct research to look for models that meet your needs and budget. You can research prices from popular sites like Edmunds and Kelley Blue Book for current prices. Afterward, you can check out CPO programs offered by dealerships and manufacturers to review their offers.

Once you find a dealership or manufacturer offering a CPO you like, consider obtaining a copy of the vehicle history report from a reputable third-party service. This will ensure no significant discrepancies between the reports obtainable from the dealership and the third party.

Next, take a test drive to feel how the car drives and to verify that there are no apparent issues with driving and safety. After driving the car, you may negotiate the price, as CPO car costs are not set in stone. You may create leverage by referring to average market prices for that model or competitor prices if priced lower. Also, when purchasing a car from a dealership, you should determine whether the warranty is backed by the manufacturer, the dealership, or a third party, as this impacts both the cost and ease of using the warranty. Additionally, you can negotiate the price of additional warranty coverage offered by the dealership. Additionally, you may ask the seller for additional perks, such as complimentary services or extended warranties. Some car dealerships may be more willing to negotiate on their CPO cars towards the end of the month or slow sales periods.

The rigorous inspections, warranties, and additional perks like roadside assistance offered by Certified pre-owned (CPO) cars may be worth the extra price for many buyers. These benefits can make CPO cars of better value than new vehicles, especially considering reduced depreciation. However, CPO cars generally cost more than non-certified used cars, and options for prospective car buyers may be more limited. Additionally, the certification process can have exclusions or limitations, meaning that CPO programs may overlook some issues or faults as they are deemed unimportant. Weighing the higher cost against the enhanced reliability and protections is critical to determining whether purchasing a CPO car over a traditional used vehicle is the right choice.