In 2021, the average transaction price for new cars will hover around $38,000 – and prices continue to rise today. That is why for many people buying a used car makes the most financial sense.
Car manufacturers, not wanting to miss out on a potential revenue stream, offer a cheaper alternative: Certified Pre-Owned or CPO vehicles. These models can give you the same peace of mind for new car owners, but at 50% to 75% of the cost of a brand new car.
What is a CPO car?
A certified used car is a used car that shows hardly any signs of use before your purchase. CPO cars are usually off-lease units that are returned to the dealer where they were first sold new. When the original lease has expired, the original lessor often returns the car in exchange for a new lease or to buy something else.
Typically, these off-lease cars are about three years old with less than 12,000 miles per year on previous service, but on the high side, many automakers won’t consider a used car for manufacturer certification if it’s more than six years old and has more than 75,000 miles on the clock.
CPO cars are often well-maintained, damage-free and return to the dealer with relatively low mileage due to the mileage limit inherent in leasing new cars. If a leased vehicle returns in a shabby condition, the original lessor will face high costs to compensate for any damage or extra mileage.
The restrictions placed on the first owner ensure that the dealer has a steady stream of top quality used cars to resell, giving the dealer a chance to make a second run. Sure, CPO cars can come from standard dealerships, but for the most part, these are off-lease cars that are ready for a second life, if you will.
If an initial inspection process deems the vehicle worthy of the certification process, the dealer must send its identifying information, the car’s VIN, a multipoint inspection checklist, and a payment to the automaker to have the vehicle manufacturer certified. Once the dealer has made the necessary repairs and the mandatory vehicle history report has been checked out, the manufacturer gives its approval, after which the dealer can list the car for sale on the dealer’s lot and website as a CPO vehicle.
Once you purchase that CPO vehicle, you will have access to a manufacturer-backed warranty that is similar to a new car warranty. For most car brands, that means nationwide zero-deductible repairs at one of the manufacturer’s dealers for duration and mileage that exceed the original warranty. Sometimes, depending on the brand, CPO shoppers have the option to finance or leasing, usually at a lower interest rate than a regular used car.
Once the customer signs their paperwork and drives off, they have access to 24-hour roadside assistance, as well as free towing, trip interruption coverage, and a loaner car to use while the CPO car is serviced or repaired. Speaking of service, Lexus sets itself apart from other auto companies by adding free maintenance for the first 20,000 miles or two years you pull the trigger on a brand CPO vehicle.
And there’s another perk: for every CPO vehicle shipped from the factory with satellite radio, regardless of manufacturer, the new owner gets a three-month free SiriusXM trial.
How much does CPO cost more?
While CPO programs are often best enjoyed with luxury brands, because of a greater likelihood of repairs that often cost more than a regular car, they can be excellent options for volume brands. CPO luxury cars usually cost thousands more than their conventional counterparts, but if that ends up saving you thousands on repairs under warranty, you could end up being the best. In any case, anyone looking for a near-new car for a better price and peace of mind should definitely check out a CPO program for their brand of choice in this market.
Why is a CPO car better than a typical used car?
Yes, you’ll have to spend more, but for those extra Benjamins, you’ll get a lot of extra peace of mind knowing the car is in great shape and covered by a warranty comparable in length and mileage to a new car warranty.
How do you know it is in good condition? The multi-point inspection. At the low end, Porsche carries out a 111-point inspection, while its cousins at Audi are more intensive with their inspection of more than 300 points. No matter how many points are checked, these inspections ensure that a car’s key mechanical, electronic, emissions and safety components meet specifications. If any of them are not, they will be repaired even if the problem is a cosmetic one.
Aside from the different inspection intensity, there are other aspects that make some CPO programs better than others. Do you expect to drive a lot of miles with your next car? Numerous brands offer unlimited mileage warranties, such as Lexus and BMW, within the warranty period. Some brands will even give you a few days to turn in a car if you’re not happy with it.
Please note that some CPO programs include a warranty deductible. Still, it’s definitely the better deal to spend $100 on a repair that might cost a few thousand.
Regardless of what you’re looking for in a CPO program — and this is true for any large cash outlay — check the fine print and make sure the CPO deal you’re considering is right for your needs. If you’re annoyed at the thought of paying a few hundred to a few thousand dollars more for a CPO car compared to a comparable used vehicle, remember that you’re still paying thousands less than what the equivalent new set of wheels would. do cost.
Living with a CPO car
In addition to the dealer’s guarantees that you’re getting a like-new car for what will hopefully be a reasonable premium over the price of a used car, CPO cars come with their own manufacturer backed warranty that extends the life of the original new car. car extends warranty.
Here’s an example: Once upon a time, a Roadshow employee bought a 2014 Audi TT. The car showed 21,000 miles, of which 29,000 miles and about a year left on the original warranty. When the original factory warranty expired, the CPO warranty took over. This gave them another year of full warranty coverage with unlimited mileage.
Advantages and disadvantages of the CPO program
If you choose to buy certified pre-owned, always keep these two principles in mind: First, you get what you pay for. Second, with used cars, you run the risk of buying other people’s problems.
While you will most likely end up behind the wheel of something downright reliable, a used car is generally not as reliable as a new one. So you will save money, but this will probably come at the cost of a slightly shorter lifespan and the lack of the euphoric smell of new cars.
CPO multipoint inspections and the associated extended warranties reduce the risk of hassle with a car in the event that it turns out to be a reliability nightmare. In addition, car companies that partner with dealers will often fund CPO vehicles at a lower interest rate than what they would pay for a regular used car, so some of the extra money you spend upfront can eventually be saved with cheaper financing.
But CPO is not for everyone. It is certainly a very good option for people who want to save money on luxury cars from brands that are synonymous with high repair costs and less than excellent reliability. It’s worth taking a closer look to see if the deal is ripe for a mass-market brand, such as Honda or Hyundai.
A CPO vehicle can come close to everything a new car offers, but for a lot less. With the inherent savings you will enjoy compared to a brand new car, in many cases the numbers just make sense.
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