At most new-car dealerships, you will encounter certified pre-owned vehicles. They are a popular choice for consumers because they offer more of what many buyers crave in a used vehicle: peace of mind. The term “certified” means that a dealer has certified to the manufacturer that the car passed a multipoint inspection, which can encompass 150 or more items, and has been repaired as needed to qualify for the CPO program. Dealers are supposed to file paperwork with the manufacturer to support this and pay a fee to obtain CPO status for the vehicle.
Going with a CPO vehicle can offer a break from the record high new-car prices seen during the current inventory shortage and the high depreciation rate that comes with new vehicles. Data shows the average advertised price among Cars.com dealers for CPO vehicles was $30,916 through the first quarter of 2022, while new vehicles averaged $35,915 for the same time period.
Every major manufacturer has a CPO program, and recent estimates show that certified cars make up a sizable portion of the used market. From January to April 2022, approximately 16% of all used-vehicle inventory among Cars.com franchised dealers was CPO.
According to David Paris, senior manager of market insights at J.D. Power, premium CPO vehicles account for a larger percentage of used sales compared to their mass-market counterparts: In the first quarter of the year, they made up approximately 29% of total used sales at franchised dealers, while only 14% of all nonluxury used cars carried the certification.
Some dealer groups, and even individual dealers, offer their own certification programs, but they are different from the CPO programs backed by vehicle manufacturers.
CPO vehicles usually are priced higher than non-CPO used cars (that difference can be from several hundred dollars to a couple of thousand) because they are touted as the best used cars available. They are supposed to have been reconditioned to like-new condition, they’re backed by a manufacturer’s warranty and they come with additional benefits that may not be provided on other used cars.
In other words, certified pre-owned cars offer most of what you would get with a new car — but at a lower price.
Age and mileage limits to becoming a CPO vehicle vary by manufacturer (compare them here), but the vehicles are usually less than 6 years old and have fewer than 80,000 miles. In addition, the CPO programs extend the manufacturer’s original basic or powertrain warranties (or both) and often include roadside assistance and a free vehicle history report.
Moreover, CPO vehicles often are available with low-interest financing from the manufacturer that is lower than what many consumers would be able to get on other used cars. According to a recent Experian auto finance report from late 2021, the average new-car loan rate was 3.86%, while the average used-car rate was significantly higher at 8.21%.
CPO programs started with luxury brands such as Mercedes-Benz and Lexus, but with all major manufacturers now involved, the most popular programs belong to the top-selling brands: Toyota, Honda, Chevrolet and Ford.
Tips for Buying a CPO Car
Here are some tips for buying a CPO car:
- Make sure you know if the car is certified by the manufacturer or the dealer. Their certification requirements may differ; if it’s from the manufacturer, you’ll be able to have your vehicle serviced at dealership locations nationwide.
- Ask to see the certification checklist to make sure all major components have been inspected.
- Insist on a vehicle repair and maintenance history report.
- Make sure the remainder of the new-car warranty is clear and in writing.
- Read the fine print on the CPO warranty. Most certified used-car warranties cover only the powertrain; if you want bumper-to-bumper coverage, you may have to purchase that separately. Some warranties are much longer than others. Some warranties are transferable; others are not.
- Pay attention to both the age and mileage limits in the warranty. Popular CPO programs like Toyota, Honda and Ford offer a seven-year/100,000-mile powertrain warranty from the original in-service date and a 12-month/12,000-mile comprehensive warranty after the original new-car warranty expires. Chances are, you’ll hit the mileage limit first.
- Get details on the return or exchange policy for the CPO program you’re considering. Is there one? Within what time frame? Will the dealer refund registration and license fees and sales tax as well?
- Take the certified used car for a nice, long test drive.
- Although it’s possible to negotiate on a CPO vehicle, the ongoing vehicle shortage means the effort to knock down the price may be futile. Instead, focus on alternative ways to save, like getting the best auto loan rate and trade-in offer.
How Much Does Certification Add to the Price of a Used Car?
While CPO cars can offer consumers peace of mind, buyers can often pay a price for that added confidence. Auto manufacturers tack on anywhere from 2% to 8% of the original used-car price for that certification sticker, experts say. Typically, the higher-end the model or brand, the higher the percentage on the car.
Although no current data suggest that certified used cars are vastly more reliable than their noncertified brethren, they do come with the suggestion of better roadworthiness.
Manufacturers place restrictions on what cars can be certified and offer multipoint inspection processes that vary from program to program.
Don’t put too much stock in certification itself. Inspection checklists should not be relied on as precise indicators of the car’s condition, experts say. They are more likely to give you an overall picture of the car’s health today, but not for tomorrow. Choosing a CPO vehicle that performs well in reliability ratings can offer additional peace of mind.
One bonus of certification is that it gives car shoppers the opportunity to buy up in a category, a purchasing experience they might otherwise be unable to attain. For example, it might allow a consumer to move into a certified pre-owned luxury car rather than a decked-out new economy car. That helps manufacturers, too, as they see these shoppers as potential longtime fans of their brand.
Consumers can also benefit: CPO programs create vehicles with higher resale values, providing increased bargaining power when it’s time to trade the car in.
Often, reduced-rate financing options are available for CPO purchasers. While you may not find the zero-percent deals occasionally offered on new vehicles, you will find low interest rates on many certified models. Shoppers with excellent credit can take advantage of rates that are well below the average of 8% for noncertified used cars.
More From Cars.com:
- What Are the Best Perks of Buying a CPO Car?
- Is CPO Worth It?
- Can You Negotiate Price on a Certified Pre-Owned Car?
- How to Compare CPO Programs
- What Is a Multipoint Inspection?
- Shopping for a CPO Car? Here’s What You Need to Know