Are Certified Pre-Owned Cars Worth It?

Certified pre-owned programs have offered a premium echelon in the used-car market since their emergence in the 1990s. CPO cars, as they’re called, get multipoint inspections, vehicle history reports and sometimes modest refurbishing. The programs bundle in other perks, too: extended warranty coverage, roadside assistance, discount financing offers and more. You might see “certified” thrown around to mean something less in the fine print, but automaker-backed certification typically comes on late-model used examples sold by dealerships of the same brand.

Related: Can You Negotiate on a CPO Car?

Naturally, CPO cars usually cost more than their non-certified counterparts. A Cars.com analysis on more than 200,000 late-model used examples of 17 popular nameplates pegged the average advertised price for CPO examples at $23,703, versus $22,686 for the same models with no certification. That’s a premium of $1,017, or 4.5%.

Is that grand or so worth it? Automakers might have you believe so: Hyundai, for example, says its CPO program adds $2,349 in value on average. But placing a dollar value on the CPO treatment is a calculus fraught with variables. We’ll explain.

Certified pre-owned programs have four main benefits:

1. A better car to start with: Of the used-car population, automakers generally certify only a subset that meets given criteria.

2. An extended warranty: CPO cars come with extended warranties you won’t get on any ordinary used car without paying extra.

3. Special financing: Automakers often give CPO models discounted financing rates more akin to their new-car financing incentives.

4. Extra perks: From satellite radio to roadside assistance, other perks abound.

How much is each of these worth? Let’s break them down.

Benefit 1: A Better Car

Generally speaking, CPO cars have limits on age and condition; non-certified used cars don’t. Programs we surveyed generally cap acceptance at cars 5 to 6 years old with a maximum of 85,000 miles. (Exceptions exist: Brands like Porsche and Ferrari will certify cars much older than that.) Many brands stipulate that CPO vehicles must have a clean title, which is to say it hasn’t been rebranded due to a major accident, environmental damage or other dubious history. All CPO programs put vehicle candidates through rigorous inspections often with 100 or more inspection points, requiring repairs for anything that fails. (Avoid dwelling on the number itself, as points can be as cursory as whether the horn works, and a given component doesn’t need to be new to pass inspection. Brake pads, for example, might pass if they still have a minimum grade of useful thickness.)

In sum, the CPO pool should help you avoid cars of questionable background — but that’s not to say non-certified cars automatically have elevated risk.

What It’s Worth

The value of the selection process depends on how much work you’re willing to do yourself. You can approximate similar qualifications with appropriate scrutiny:

• Search only for used cars that fit the age and mileage boundaries imposed by their respective brand’s CPO program. Compare such criteria among most brands here.
• For any prospective car, get a vehicle history report from a leading provider, such as Carfax or AutoCheck, that shows no red flags.
• Scrutinize the car with a thorough in-person inspection and test drive.
• For cars that pass all three steps above, finish with a professional used-car inspection from a reputable independent mechanic in the area. Such inspections can range widely, but you should insist on an engine compression test and frame-rail inspection, among other items. If the seller doesn’t let you take the car for an inspection, that’s cause for concern.

Depending where you live, the steps above might cost $100 to $200 and a few hours of time, and you may need to embark on the process more than once if it reveals any deal-breakers.

It also bears reminding that there’s no way to fully eliminate the risk of buying a problem car. This is all about improving your odds; CPO vehicles can save the trouble of going through the process above, but such programs make no guarantee of problem-free ownership. We still recommend test-driving any used car you plan to buy, CPO or not, and the most risk-averse shoppers may still want to secure a mechanic’s inspection for a CPO car.

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Benefit 2: An Extended Warranty

What your efforts can’t buy is the CPO warranty. Programs we surveyed typically furnish comprehensive (often called “bumper-to-bumper”) coverage from the time you buy a CPO vehicle to one year or 12,000 miles past that, whichever comes first. If your car is still within its factory comprehensive warranty, certification programs typically tack this coverage onto the end.

Separately, most CPO programs furnish a longer warranty for your powertrain, which includes the engine and transmission, that extends in most cases to 100,000 original miles and six to 10 years from when the car was new. 

Both policies carry significant value combined, but myriad variations exist: Many luxury brands don’t have separate powertrain coverage in their CPO warranties; Nissan, by contrast, furnishes only powertrain coverage. Pay attention to the deductibles paid per visit, even if the repair is covered by warranty. Some brands have zero-deductible CPO warranties; others impose a fee.

What It’s Worth

Extended warranties are often the highest-value item in a CPO program. They’re also the most straightforward to compare against stand-alone extended warranties — often called service contracts — though the two may not line up exactly. Find out what’s covered in both, keeping in mind that no warranty will cover everything.

You should have plenty of stand-alone alternatives to choose from. Automakers, dealers and even third-party companies sell extended warranties, but specifics vary, especially when it comes to who services the contract. CPO warranties are typically backed by the automaker, which means any participating dealership can perform repairs. Stand-alone extended warranties furnished by the automaker usually carry similar backing, but that’s seldom the case for warranties furnished solely by the dealer or a third-party company. Such policies may cost less than a factory extended warranty, but read the fine print: Only the facilities contracted into the policy, or the dealership that sold it to you, might cover its services.

Few brands display prominent pricing on factory extended warranties, so you’ll want to ask your dealer for details. One brand that does offer online pricing is Chevrolet. Cars.com audited prices for the brand’s high-level extended warranty (akin to bumper-to-bumper protection) across 240 scenarios of varying models, vehicle age, location and coverage lengths. Chevrolet’s upfront pricing ranged from $561 to $1,318 per year, per vehicle, with an average across all variables of $884.

That’s from just one brand, of course, and it’s the factory price — something you can often negotiate. Still, it’s a useful framework for the dollar value on a single year of bumper-to-bumper coverage in a typical CPO warranty, remembering that your specifics will vary based on the vehicle, age and location.

The powertrain portion of a CPO warranty is a separate matter. Many providers offer powertrain-specific extended warranties, typically priced below bumper-to-bumper warranties because they cover less. Get a quote or two for your prospective car, and it should help value that portion of the CPO warranty.

Benefit 3: Better Financing

About 4 in 10 used cars are financed, per Experian. It’s likely many such buyers wish their loans had lower interest: Experian says that in early 2020, finance rates for used cars of all types averaged 9.65%, versus 5.61% for new cars. That’s despite used-car loans being shorter (64.8 months on average, versus 69.2 months for new cars) and lower (an average $20,723 financed, versus $33,739 for new cars).

CPO programs can help bridge the gap, as they often offer low-interest financing closer to the plum rates on new cars. It’s likely that only the most creditworthy shoppers will secure such loans, but the closer you can get to new-car interest rates, the more it can save over the life of the loan.

What It’s Worth

Gauging how much a low-interest loan saves is complicated. On a five-year loan for $20,000, the difference between Experian’s average rate in early 2020 for a new car (5.61%) and a used car (9.65%) amounts to an enormous $2,308. But you shouldn’t take those savings at face value. For starters, a big reason used-car loans have higher interest rates is that they cater to shoppers with lower credit. In early 2020, new-car shoppers had an average credit score 61 points higher than used-car shoppers, Experian said. Barring a Doug Kinney event, there’s only one of you, so it’s unlikely a low-interest CPO loan for which you qualify would beat the loan on a non-certified car by that sort of margin.

That said, it might come in a reasonable amount lower, especially if you secure the advertised rate. In the scenario above — a $20,000 loan financed over five years — moving from 6% down to 5% saves $554 over the life of the loan. Moving to 4% saves another $546. That’s nothing to sneeze at.

But, again, those savings may not add up at face value. Typical new-car incentives offer you the largest cash discounts or lowest-rate financing as separate deals, but not both. Used cars lack fixed prices, so CPO vehicles seldom advertise cash discounts — but securing the plum finance rate might mean the dealership budges less, or not at all, on the negotiated price. If dollars saved on the financing side come at the expense of dollars not saved in vehicle price, an honest assessment must account for that.

Confused? The point is this: Discount financing on a CPO car could save serious money, all other things being equal. But consider that against the financing terms you’d otherwise secure on a non-CPO car, as well any ground you gave up — a murky assessment, admittedly — on the negotiated price of the car.

Benefit 4: Other Perks

Beyond the core benefits of buying CPO, automakers throw in myriad other perks. Among them:

• Satellite radio: SiriusXM allows dealers in its program to activate a three-month trial to its All Access subscription on CPO vehicles once they’re sold. (Unsurprisingly, most programs we surveyed mentioned three months’ satellite radio on cars thus equipped.)

• Roadside assistance: Many brands throw in roadside assistance for a year or longer on CPO vehicles. 

• Free maintenance: Some brands add in complimentary maintenance — Honda and Chevrolet cover the first two visits after purchase, for example. Acura covers the first visit; Lexus covers up to four.

• Telematics: Some brands furnish a trial period of complimentary telematics service. Acura gives three month’s of Acura Link, while Chevrolet gives a month of OnStar Safety & Security coverage with 3 gigabytes of Wi-Fi data through AT&T.
• Return policies: Some programs have options to return the vehicle within a few days if you don’t like it — three days for most GM brands, for example, or seven days for Mercedes-Benz. (In the cases we observed, mileage limits apply.)

What It’s Worth

Many such perks involve immediate, tangible benefits (you can’t get Yacht Rock without an active SiriusXM subscription, after all). But the extras have determinable value: Three months of in-car SiriusXM is worth some $33 to $66 in total, depending on the package, and two free maintenance visits might save you $100 to $150, depending on the car. Roadside assistance is readily available from your insurance provider, credit-card company and other third parties. NerdWallet values it at $5 to $100 per year, depending on specifics. GM’s month of OnStar is worth $25 plus the value of the data — a minimal value given an hour of high-def Netflix can use it up.

All of those perks might add up to a few hundred dollars, but only if you’d planned to purchase them individually in the first place. If you don’t intend to listen to much satellite radio, it’s worth comparatively less. If most of your past oil changes have come with online coupons, two free maintenance visits probably aren’t worth $150. You get the idea.

More From Cars.com:

• How to Compare CPO Programs
• Pros and Cons of CPO Versus an Extended Warranty
• Shopping for a CPO Car? Here’s What You Need to Know
• The Basics of Buying a CPO Vehicle
• Factory CPO Programs Versus Other ‘Certified’ Vehicles
• Search for CPO Cars

Adding It All Up: What Matters to You

Automakers sold 2.8 million CPO cars in 2019, by Automotive News’ tally. That’s only about 7% of all used cars sold last year — about 40 million in total, per IHS Markit. Still, by AN’s count, full-year CPO sales have grown for 10 consecutive years. They’re up 6.4% over the past three full years (2016-19) even as new-car sales ebbed 2.5% over the same period. Any way you slice it, CPO is a small but growing market segment.

Does it make sense for you? That depends. For shoppers who value each benefit listed above at its dollar-value equivalent, it’s easy math to pay an extra 4.5% on a CPO car. Conversely, shoppers who see little to no value from each benefit have no reason to buy certified. We suspect most shoppers fall somewhere in between. If you find value in some parts but not others — the warranty but not the inspection, for example, or the financing but not the extra perks — then it’s worth assigning individual value to each benefit to assess the total value of a CPO program against your needs. Add it all up, and you should have a pretty good idea of whether buying certified is worth it.

Cars.com’s Editorial department is your source for automotive news and reviews. In line with Cars.com’s long-standing ethics policy, editors and reviewers don’t accept gifts or free trips from automakers. The Editorial department is independent of Cars.com’s advertising, sales and sponsored content departments.