Is CPO For You?

When is buying a certified pre-owned car the right thing for you? To decide, you first need to understand the differences among used cars.

Older cars that are traded in when a new one is purchased become part of a dealer's used-car fleet and, as a rule, the dealer keeps the good ones and disposes of the bad ones.

For decades, used cars were seen by many consumers as piles of junk looking for a home. To them, "used" meant "abused." Then along came a wise marketing type who sought to change that image by calling used cars "pre-driven" or "pre-owned."

The change made it considerably easier to sell the cars, as dealers went from selling someone else's trouble to selling someone else's treasure.

The pre-owned car got an even greater image boost when Mercedes-Benz began selling "certified" pre-owned luxury cars in the late 1980s.

Automakers came up with the idea of having dealers inspect and repair trade-ins before re-selling them. But with an added bonus that made the venture worthwhile -- dealers would inspect and repair the cars out of their own pocket, and the factory would then offer a warranty on these "certified" pre-owned cars.

There are differences among certified used cars. There are certified pre-owned factory-backed programs and certified pre-owned dealer-backed programs. The biggest difference is that factory-backed programs offer a warranty that's backed by the factory at no cost to you. With dealer-certified programs you usually have to buy an extended warranty from the dealer to ensure coverage.

So why should you consider a certified pre-owned car?

It gives you another option when buying a car. As the average price for a new car passes $30,000, a certified used car takes away most of the depreciation, offers you a car that's been inspected (and often fixed) and usually has some sort of warranty attached to it. The price of the car rises to defray the cost of those perks, but the higher price can be offset by the consumer's peace of mind.

By Jim Mateja for

Last updated on 07/10/2013