Blog Certified Pre-Owned Cars Made Simple (Guide to CPO)

Certified Pre-Owned Cars Made Simple (Guide to CPO)

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If you’re in the market for a pre-owned car, van, truck, or SUV, you might want to compare a class of vehicles known as certified pre-owned cars, or CPOs. But what are they, where do you find them, and what does it all mean? Automotive experts trace the birth of CPOs back to the early 1990s when leasing vehicles started to become more popular. As leases expired, low mileage cars in excellent condition were being returned to dealerships. The dealer was faced with putting the cars back on the lot, selling them as a trade-in, or sending them to auto auctions. Instead they created programs to resell the cars complete with detailed inspections, reconditioning, extended warranties, and extra perks. Nowadays, nearly every major automaker offers a CPO program. While these programs share some similarities, they vary widely depending on brands. The features and benefits they offer are usually tied to the price of the cars they cover.  Luxury brands typically offer better perks, while the affordable car plans cover the basics. Whatever your budget, it doesn’t hurt to take a good look at CPOs.

For affordable cars consider a CPO from Nissan, Kia, Hyundai, or Volkswagen. For something in the luxury class consider certified pre-owned vehicle from Audi, Mercedes-Benz, Genesis, or Infiniti. And for more specific information on some of those brands check out our other articles:

Typical CPO requirements restrict how old a car can be, its condition, and the mileage the car has on it. Certified pre-owned vehicle programs usually exclude cars that have been in a wreck. Cars that are accepted into the program go through an extensive multi-point inspection process. Other perks of the program may include warranties that transfer to a car’s new owner, extended warranties, roadside assistance and the use of loaner cars.  Overall, certified pre-owned cars can offer a certain amount of safety.

What is meant by certified pre-owned cars (CPO)?

CPO vehicles are late-model cars with low mileage and no record of significant damage.  When they come back to the dealership they are inspected, and if needed, reconditioned and repaired. They are offered back to public with a manufacturer-backed warranty. A dealer offering a CPO may also throw in some bonuses like low financing rates or no money down.

What about CPOs from the factory vs. individual dealers?

CPO programs can come from a car manufacturer, or the factory, and are offered through an authorized dealer network. They can also come from an individual dealer. Programs from individual dealers often don’t include factory warranties, which are considered stronger in terms of what they will cover. Dealers are also free to set up their own CPO programs based on their parameters for certification, inspections, and qualifications.  Before buying a certified pre-owned vehicle, find out if the manufacturer or just the individual dealer covers the car.

What are the advantages of buying a CPO car?

The main advantage to buying a CPO car is that they are low mileage, fairly new vehicles that have been gently used. They were sold new from car dealerships and then returned where they were inspected and reconditioned. If you are concerned about whether your new purchase has been in a collision or survived a flood, keep in mind that most CPO programs sponsored by manufacturers exclude those vehicles from the program. You can double check your prospective new car’s history by checking it out on CarFax. Having the car inspected at the dealership can also alleviate any major repair issues before the car leaves the lot again. If you want to double check the dealer you can also request an inspection from an independent garage but you may have to pay for it yourself. Warranties are always a good idea as the cost of one major repair can crush any budget. Keep in mind that not all warranties are created equal. Manufacturer backed warranties that transfer to CPOs from BMW, Porsche, and Volvo may extend to 100,000 miles. Also read the fine print as warranties often exclude expensive bells and whistles like navigation systems and onboard entertainment systems. CPOs are often eligible for better financial terms from the dealer, banks, or credit unions. Because they carry less risk of failing before the loan is paid off they are a safer financial bet.

What are the disadvantages of buying a CPO car?

The main disadvantage to buying CPO vehicles is that they are typically more expensive than cars that do not qualify and the designation is not available for older, high mileage cars. Of course, the reason they are more expensive is that you are paying for the inspection, warranty, and any other fringe benefits the manufacturer offers on their CPO models.

Are CPOs considered good deals?

CPO vehicles are typically considered to be a good investment as much of the risk of buying a used car has been removed via, inspections, warranties and the fact that the car is not that old and does not have high mileage. Whether you’re looking in the luxury class or for something more affordable, consider going CPO.

Why buy a certified pre-owned car?

Buying a pre-owned car is less expensive than buying new. You will also avoid the depreciation that occurs as soon as a new car becomes a used car. Some cars can lose half their value in a year, as this calculator shows. In addition to saving on the initial cost, sales tax on a used car is typically cheaper and in some places buying a used car from a private individual is not subject to any sales tax. You can also avoid destination charge and dealer prep costs by buying something other than a brand new car. Newer cars are built to last longer with fewer repairs than their older ancestors so even a used car with some miles on it will have plenty of life left in it. According to ASE-certified Master Automobile Technician and Chicago Tribune auto-service columnist Bob Weber, “Today’s cars are built to last as long as 250,000 miles or more with simple routine care.” A few years ago, the idea of getting 100,000 miles out of a car without a major repair was considered a good rule of thumb.

Can you lease a pre-owned car?

Leasing a used car can be done and advantages to the arrangement include paying only for the depreciation that happens during the term of the lease, the option of buying the car at the end of the lease, and not having to worry about selling the car at the end of the lease. If you pick a car with a slow depreciation rate you’re even further ahead of the game. On the luxury end of things, think about Audis, Mercedes-Benz, Infiniti, Genesis, and BMW’s. On the affordable side consider Volkswagen, Kias, Hyundai, and Nissan. Depending on a car’s situation you may even be able to sign into a short-term lease, meaning you’re coming into a lease that’s already half over. This could come in handy if you want to give a new brand of car a try-out or if you’re in a temporary location that requires you to have a car. There are also a few disadvantages to leasing a pre-owned car including the fact that the car will have additional miles on it and be more subject to repairs. Some used car leasing arrangements cover maintenance, but not all of them. Keep in mind that leasing a used vehicle is a niche market and not every dealer offers it. You may have to pay for acquisition fees and disposition fees but sometimes these are negotiable depending on how bad the dealer wants to get the vehicle off his lot.  Also examine any mileage caps and interest rates, which also might be negotiated. You could also be responsible for carrying collision, gap, or full coverage insurance. The shared economy has given us online services for assuming somebody else’s lease but be carful before signing into any agreements. Just like a normal lease, assuming somebody else’s may be subject to mileage restrictions and any needed repairs may be your responsibility. There are many advantages to buying or leasing new or used cars.  Car dealership have become much more creative in terms of getting cars into the hand of consumers.  Taking advantage of a CPO program can help add a certain amount of peace of mind to the stress of buying a used car. If you don’t want to or can’t afford a new car consider the next best thing by understanding what to know about buying or leasing certified pre-owned cars(CPO).