Certified pre-owned, or CPO, vehicles are advertised as the premier secondhand vehicle, the ultimate choice for both shoppers on a budget and shoppers who want the most bang for their buck. But a CPO car is still a used car, so does the designation actually mean anything? Or is it, like a lot of designer clothing, sold at a premium price because it just…seems better? Buyers who head to Google to search “used cars near me” may soon find themselves perusing a CPO inventory, but should you be on your guard?
This may sound harsh, but the truth is that the auto industry, like just about every commercial industry, can take advantage of uninformed shoppers, as well as shoppers who have too much cash and too little judgment. We’re taking a close look at what actually makes a car “certified pre-owned,” not just what the dealerships say. Here’s what you need to know about this label, what it actually means for any vehicle on the lot, and whether you’re really getting more quality for the money.
Costs
Let’s start with the negatives because it’s best to get them out of the way first. A certified pre-owned car is nearly always priced higher than a comparable ordinary used car. However, the price difference isn’t so shocking. Normally, you can expect to see a higher price tag of between $1,000-$2,000 in most cases, and that upcharge comes with certain other perks that are included in the price. That’s far less than the difference between trim packages on the same vehicle and less than some other upgrades like special off-road equipment and towing packages.
Surprisingly, you aren’t paying much of a premium when buying certified pre-owned. Even when you accumulate fees like state taxes on your purchase – which often break down to a percentage of what you owe – you’re still paying around $2,000 on average. It’s hard to turn down certified pre-owned quality when you think of it as paying for an upgrade. Here’s what you actually get for that extra investment.
Limitations
First of all, certified pre-owned cars can only be so certified if they’re within certain limitations. Not everything can be labeled as certified pre-owned; it has to earn that rank. In order to do so, the vehicle essentially has to pass for being just short of new.
The first limitation to gaining CPO status is on ownership. A certified pre-owned car nearly always has only one previous owner due to the fact that they tend to be newer models. A used car, meanwhile, has no limits. There can be any number of previous owners, and the vehicle history report may be less than ideal.
CPO cars also have age and mileage limitations. We would be the first to laud a Honda or Toyota for its insane longevity. However, just about every car that’s exceeded 100,000 miles is going to start showing its age, hence why most auto dealers just happen to cut warranties short around that time. Most CPO cars have a mileage limit of up to 85,000 miles and are up to 6 years old, at most, meaning that you take home a vehicle that has more potential longevity than the average, standard used car.
Finally, certified pre-owned cars have history limitations, in that the vehicle must be clean of any major accidents, serious damage like vandalism or flooding, and severe failures like a dead brake system. Other used cars have no such limitations. This doesn’t mean that every car in the used lot has been flooded, vandalized, and crunched by an 18-wheeler, but to many drivers, the confidence that a CPO car has a clean history is well worth the upcharge.
Quality and Performance
Now here’s the good part. Let’s consider how a CPO vehicle is going to perform against a similar used car. First, there’s the matter of multi-point inspections and reconditioning. Certified pre-owned cars gain their certification by undergoing a close inspection and some reconditioning to basically make them look and smell practically brand-new. Only qualified mechanics, those who have owned an Automotive Service Excellent certification, can then certify a used car as “pre-owned” after said evaluation and upkeep.
Used cars, meanwhile, can have as little as zero inspections or reconditioning, although most used car dealers worth their salt won’t stake their name on selling a used car that hasn’t been at least looked over. Realistically, any car you buy off a used lot will be in good shape and not likely to fall apart any time soon. However, a CPO car, unlike other used cars, is confirmed to have excellent steering, brakes, airbags, and other vital factors that add up to a reliable drive. It’s hard to turn down certified pre-owned quality when you think of it as paying for an upgrade.
Now here’s where the question of used vs CPO performance becomes a bit of a trick. You see, the CPO car is likely going to perform better because it’s going to be maintained well, what with its clean history, limited previous ownership, and the extra service plan you can tack onto your purchase. In addition to qualifying for limited warranties, including powertrain coverage, a CPO vehicle usually qualifies for mechanical repair service contracts, which will cover a certain amount of upkeep. Used cars, meanwhile, may be considered a liability and are unlikely to qualify. While it’s ultimately up to a CPO or used car owner to make sure their vehicle stays in good driving shape, the extra service plan on CPO cars is a great incentive to stay on top of maintenance.
Just note that a warranty isn’t a catch-all. It won’t cover absolutely every service your vehicle may need, but it does cover enough to warrant the extra cost of certified pre-owned. For details on what’s covered, ask for a breakdown from the dealership, as warranties aren’t just brand-specific but dealership-specific, too, as are the terms like deductibles and limitations in each plan. It pays to do your research and ask for specifics.
Savings
Finally, it’s worth considering the potential savings of buying certified pre-owned. First, there’s the gamble. CPO cars may be less likely to need pricey services and expensive maintenance than a used car with a tinge on its title would. Therefore, when you shop for non-CPO used, there’s the potential for higher costs down the road.
Then there’s the financing side of things. Surprisingly, many banks offer lower interest rates on financing for a CPO car than an ordinary used one. This is likely because banks perceive these vehicles as superior investments that last longer and have a higher resale value. Add to this the free perks that come with CPO cars, like a free trial of SiriusXM satellite radio, free roadside assistance, and temporary dealership specials, and you may end up getting a discount by choosing CPO.
Our Verdict
Ultimately, a quality car is a quality car, whether it’s used or certified pre-owned. Our best-reviewed cars are going to hold up to higher mileage and multiple owners. However, the added perks of close inspections, a maintenance package, and a clean title mean that you’re getting the best from a CPO car. Then again, to budget shoppers, there’s no beating the rock-bottom deals from shopping non-CPO used.
Certified pre-owned may account for only a small percentage of used auto sales, but their popularity is growing, and it’s easy to see why. For a small added fee, you get to drive with peace of mind. Plus, there’s no beating that new-car-smell, even if – in the case of CPO vehicles – it’s just an illusion.
