Are Certified Pre-Owned Programs a Good Used Car Value?

by Don Elliott on April 26, 2011

Certified Pre-Owned is the name given to used cars and trucks that have been inspected, reconditioned, and guaranteed to be in good condition. On the surface, it would appear to be a great way to get great used car at a great price.

Over the past several years, the phrase “Certified Pre-owned” or “CPO” was not well defined. Who did the inspection? Who made the repairs when required? What was the guarantee, warranty or extended service contract? How much extra should a car with CPO be worth?

More recently, manufacturer or factory Certified Pre-Owned vehicles have become the standard. In fact, according to Auto Remarketing magazine, March was the second best CPO month on record with 162,092 Certified Pre-Owned vehicles sold through franchised dealerships and manufacturer-sponsored programs.

Typical of all of the manufacturers’ CPO programs are the following:

  • Extended warranty
  • Special used car financing
  • Multi-point inspection by factory trained mechanics
  • 5 years old or newer

Additional benefits included in some factory programs are roadside assistance and a return/exchange policy. It is important to determine exactly what is included in each manufacturer’s program when shopping for a fair used car value. For example, Cars.com lists 36 month financing on select GM, Ford and Infinity models for 1.99%. Hyundai will finance CPO vehicles for up to 72 months at 5.49%. There are plenty of details and conditions to qualify for these loans so it pays to shop around.

Some franchised and independent used car dealers offer Certified Pre-Owned programs that are not supported by the manufacturer. Many are backed by third-party inspectors and carry extended service contracts instead of the manufacturer’s extended warranty. Only the manufacturer can extend the car’s original new car warranty. While these programs are not as secure as the factory CPO programs, each one may have merit once properly researched. Determining that the car has in fact been inspected by a trained mechanic and found to be in good condition is an important first step. Extended service contracts can be written for varying terms and mileage conditions making them a little more flexible than more rigid manufacturers’ extended warranties.

Finally, shopping for a good used car value should always include a vehicle history report. Most Certified Pre-Owned programs include a vehicle history report as part of the work done to determine whether the used car is eligible to be certified. However, the vehicle history report is not always made available to the buyer. Ask to read the complete report just to be sure there aren’t any surprises.

Have you bought a Certified Pre-Owned car or truck? Send us a comment to let us know about your experience.

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