Buying a car, regardless of whether it's new or used, can be expensive. Many drivers want to save money on their car purchases, but that may not always be possible and can result in a less than desirable car. The growing popularity of certified pre-owned (CPO) vehicles, however, affords car shoppers a potential solution to that problem. If you're looking at buying a certified pre-owned car to save money, keep some of the following points in mind.
What Is a Certified Pre-Owned Vehicle?
Car dealers like to tout that a used car is "certified;" yet not all cars labeled as such are truly CPO vehicles. A CPO vehicle is a used car that has gone through extensive testing by the given manufacturer to meet certain standards. For example, a possible Ford CPO vehicle is inspected by a Ford factory-trained mechanic from the manufacturer – not from a Toyota mechanic, and vice-versa.
Each manufacturer has specific guidelines to qualify for their respective CPO program. In most cases, this will require a specific age and mileage requirement, so it's usually late model, low mileage cars that qualify. The benefit to you as a car buyer is peace of mind that the car, while used, meets strict requirements without the hefty price tag of a new car.
Ways a CPO Vehicle May Save You Money
While a CPO vehicle provides peace of mind, that confidence does not come free of charge. Edmunds reports that CPO vehicles cost, on average, $1,500 more than their non-certified counterparts. This raises the question of whether or not you save money when buying a certified pre-owned vehicle. The answer is yes, and in at least three tangible ways:
- Less potential repairs – Given the more rigorous inspection process CPO cars go through, you may spend less on repairs than you would with a non-certified used car.
- Potential extended warranty – Some manufacturers allow you to take over the original warranty until it ends, plus add an extended warranty. It's important to remember this varies by manufacturer so you will want to know what type of coverage you qualify for before you purchase your car. Any coverage you do receive is a savings vs. having to purchase an extended warranty on a non-certified used car.
- Lower depreciation – According to Carfax, a new car depreciates by at least 20 percent in its first year. Buying a CPO car allows you to avoid such a steep immediate depreciation. It is important to remember, however, the newer your CPO vehicle is, the greater depreciation you will realize during the first few years of ownership.
Additional savings factors with CPO vehicles include increased fuel efficiency and advanced safety features that may reduce your auto insurance premiums.
Things to Keep in Mind When Considering a CPO Car
The growth of the CPO niche is great for car buyers. It allows shoppers the ability to buy a newer used car that has been inspected by a qualified mechanic. However, CPO cars are still used cars. They have wear and tear like any other used car and may have less than perfect parts that weren't replaced if they were considered in the acceptable realm. As such, it's important to know what the warranty covers if one is offered on the CPO vehicles you are considering.
It is possible to find quality used cars that don't carry the premium attached to a CPO vehicle. While they may not have the special name attached to them, they can still be reliable and offer a good value. That's also not to mention the fact that higher demand for CPO vehicles may drive up the price, negating any potential savings you'd realistically expect over buying a non-certified used car. Ultimately, as with any major purchase, buying a CPO vehicle requires research and thoughtfulness to determine the potential value for your specific situation.
The growth of the certified pre-owned vehicle market provides car buyers greater choice. Do the math to make sure buying a CPO vehicle will truly save you money.