What Does Certified Pre-Owned Mean?

A certified pre-owned (CPO) car is more than a used car. Think of it as a used car plus: a late model, low-mileage vehicle that’s been inspected and reconditioned to new-car levels according to the manufacturer’s standards. The CPO designation gives buyers peace of mind — and a warranty backed by the automaker — but you’ll probably pay more for certified pre-owned cars than other types of used cars.

Pros and cons of buying certified pre-owned cars

CPOs are often trade-ins or leased vehicles that have been returned to the dealer. They are inspected, repaired if necessary and then put up for sale. The advantage is purchasing a used car that’s been vetted rather than a standard car with an unknown past. Keep in mind that manufacturers have different CPO criteria for age, mileage and wear and tear.

Pros

 Nicer vehicle.  A typical three-year-old CPO vehicle has about 5,000 fewer miles and is usually in nicer condition than a similar used car, according to Black Book, an industry pricing/value guide.

 Lower risk. The cars have passed a rigorous inspection and have an extended factory warranty, and dealers check to make sure any recalls have been performed.

 Lower APR. Manufacturers offer special APRs for their CPO vehicles which are lower than used auto loan rates you might see at banks or credit unions. You might even find 0% APR deals on a CPO car, but you typically need excellent credit to qualify.

 Extras. The manufacturer may offer perks like roadside assistance, free oil changes and a free trial for SiriusXM Satellite Radio. General Motors even offers a free exchange of a CPO vehicle within three days or 150 miles if you change your mind.

Cons

 Higher price. A CPO vehicle will cost a few thousand more than a similar used car that’s not certified.

 Fewer buying options. You can only get CPO vehicles from a branded dealership, so your shopping options are limited.

 CPO doesn’t mean perfect. A CPO car can still suffer from problems that plague a particular model, or the dealer may not catch everything that’s wrong. Also, wear-and-tear items like tires aren’t replaced if there’s sufficient life left. You may be on the hook for these the way you would for any other used car.

Are certified pre-owned cars worth it?

If you’re debating between a new or used car, a CPO car is a third option. You could buy a higher-end brand or trim level for less than the new version of the same car. “You can buy a two- or three-year-old off-lease vehicle and realize some savings,” said Matt DeLorenzo, managing editor of news at Kelley Blue Book.

With a little legwork, you might find a similar vehicle without the CPO designation and save some money. A certified pre-owned car costs about 3.5% more on average, but the difference may be greater for luxury vehicles, around 7%, according to Black Book.

CPO warranties: what to consider

A CPO’s warranty might factor into your decision, too. Many manufacturers extend a CPO’s original factory warranty. If the car you want has much of its original warranty left plus a year or two of a CPO warranty after that, this could be an advantage. Read the fine print and make sure you understand what’s covered and what isn’t. A bumper-to-bumper warranty typically covers brakes, steering, suspension and electrical systems but is shorter than the powertrain warranty, which covers the transmission, engine and front- or rear-wheel drive. Warranties backed by the manufacturer should be honored at any of the brand’s dealerships.

These are different from extended warranties, which are sold as add-on products. They may cover expenses factory warranties do not, but watch out for overlapping coverage and varying prices.

CPO deals

If a CPO car sounds like a good fit, manufacturers often offer promotional financing deals or other incentives for CPO cars much the same way they do for new vehicles. Good credit is required to get the best deals from the manufacturer’s vehicle financing company which may vary by model and location, so check with your dealer for eligibility and current offerings. We rounded up offers from the top 10 auto manufacturers, as measured by U.S. sales.

Certified pre-owned vehicle FAQs

What is the difference between used and certified pre-owned?

When it comes to a certified versus a used car, a CPO car has undergone an inspection and reconditioning to factory standards. The manufacturer will stand behind the condition of the vehicle through the warranty. CPO cars usually have lower mileage and are in better condition than similar used cars.

What is the benefit of certified pre-owned?

Peace of mind — you can buy a used car in good condition that’s backed by a factory warranty. A CPO car may be like buying new for a less-than-new price.

What is the best certified pre-owned car to buy?

Like any car purchase, the best choice is the one that fits your lifestyle and budget. Check manufacturers’ websites for availability and incentives in your area. Hyundai’s CPO program has been recognized as a top program for its warranty coverage and service offerings.

Can you negotiate certified pre-owned prices?

Yes, you can negotiate certified pre-owned prices like any other car. Dealers have invested in inspecting and reconditioning the car to meet CPO standards so they may be reluctant to budge, but it never hurts to ask. As always, do some comparison shopping to see if you’re getting a good deal.