If you’re in the market for a new vehicle, but you’re on a tight budget, a late-model used car may be a wise choice. Buying used means you won’t suffer the depreciation associated with brand-new vehicles. However, with a plethora of used cars to choose from, how can you be sure you’re not spending your money on a clunker. In the early 1990s, some automakers started CPO programs to bank on low-mileage trade-ins and lease returns. Many vehicles were returning to dealerships in excellent condition, so rather than sending them to auction, manufacturers created programs to resell the cars complete with detailed inspections, reconditioning, extended warranties, extra perks, and added peace of mind. Today, nearly every major automaker offers a CPO program. While these programs share some similarities among brands, they vary widely. Moreover, mainstream CPO programs generally differ from luxury CPO programs.
CPO vehicles are late-model cars with low mileage and no record of significant damage. The cars undergo a detailed, multi-point inspection and reconditioning process. They also come with a manufacturer-backed warranty. Oftentimes, these programs feature a long list of extras, including free maintenance, free roadside assistance, and a complimentary loaner vehicle. Finally, dealers regularly offer low financing rates or special deals on CPOvehicles, much like you’d find on a new car.
CPO programs vary. We’ll use Toyota’s as an example of what a CPO program from a non-luxury automaker looks like. Each car must be seven years old or newer and have less than 85,000 miles. Qualifying cars undergo a 160-point inspection and come complete with a CarFax vehicle history report. Every certified pre-owned Toyota gets a 12-month/12,000-mile bumper-to-bumper warranty and a 7-year/100,000-mile powertrain warranty. It’s important to note that the powertrain warranty begins on the car’s original purchase date. Toyota also includes extras like one year of free roadside assistance, a complimentary loaner car, and travel reimbursement protection. The loaner and the travel reimbursement are only available if your car is in for a covered repair.
Like mainstream programs, luxury CPO programs differ between automakers. We’ll take a look at Mercedes-Benz to give you a basic idea of how a luxury CPO program works. For a car to qualify as a Mercedes CPO vehicle, it must be six years old or newer and have less than 75,000 miles. Eligible vehicles are then put through a rigorous, 164-point inspection. If the car still has coverage under its original new-car warranty (four years/50,000 miles), the warranty transfers to the CPO buyer. If the original coverage is expired, or once it does expire, the owner gets an extra year of certified limited warranty with unlimited mileage. There’s also an option to purchase one or two years of additional coverage, which also features unlimited mileage. Extras include 24-hour complimentary roadside assistance and loads compensation for travel expenses incurred as the result of a covered repair.
Keep in mind that not all certified used cars are manufacturer-sponsored. Some dealers have their own certified programs with similar benefits. However, they don’t come with a manufacturer-backed warranty. Additionally, since the dealer is free to set its own parameters for certification, vehicle qualifications and the inspection process may not be consistent with manufacturer standards.
CPO vehicles are more expensive than “regular” pre-owned cars. You’re paying more up front for the inspection, warranty, and various extras in the hope that you won’t have to sink money into the vehicle later. However, there’s no way to forecast what may happen after the warranty expires, or how much repairs may cost. If you opt for a used car without certification, you could use the money you save to cover expenses later. CPO programs also aren’t available for older cars, so if you like to buy low-cost, high-mileage rides, CPO isn’t for you.
No matter which path you choose, it’s advantageous to have the used car checked out by a trustworthy, third-party mechanic before you close the deal. This will help you make a more informed buying decision.