Certified Pre-Owned Cars: Buying Security—Maybe

When you are buying a used car, particularly a late-model high-end vehicle, one way to remove some of the risk is to spend more and get a “certified pre-owned” (CPO) car.

Under most of these programs, you get the assurance of buying a tested and inspected vehicle backed by a warranty extending support beyond the car’s original term. And you avoid the depreciation hit that buying new entails.

You will want a manufacturer’s CPO, not one from a dealer or a third party, and you will want to read the fine print carefully. Specifics and coverage vary a lot. And be prepared to pay anywhere from $1,000 to $3,000 (2 to 8 percent or more) over the price of the car, plus higher rates for specialty cars.

Most vehicles you’ll find under CPO are program cars or cars coming off lease with relatively low mileage and no major damage. BMWs, for instance, must be less than 6 years old and have less than 60,000 miles.

New BMWs have a 4-year/50,000 mile warranty; under their CPO program, that’s extended to 6 years and 100,000 miles from the original in-service date. You also get roadside assistance, a CarFax vehicle history report, and lower financing rates than on non-certified used cars. Right now, the company is making three “amazing offers,” good through the end of this month.

Okay, what’s the downside to all this? Well, CPO will often add a lot to the price of your car, so if you’re a bargain-hunter, forget it. I tend to agree with Keith Griffin, who says,

A good inspection by a trained mechanic would serve the same purpose, except, of course you would not have the extended warranty. In most cases, preventive maintenance and the good inspection combined make it possible to buy a used car that is as good as certified pre-owned, but without the higher cost.

Keith also presents the annual IntelliChoice ranking of manufacturers’ CPO programs, which finds Volvo, Saab and Cadillac as the top-three luxury brand offerings; Mini and Volkswagen (tied for first) and Hyundai were tops in non-luxury.

Like everything else in buying a used car, CPOs are problematic—valuable for some, too expensive for others, and a big unknown for still others. As always, make no assumptions, ask questions, follow the advice we’ve given before, do a thorough mechanical inspection on your own, and don’t forget to use the CarGurus’ DealFinder to make sure you’re getting the best local price.

Have you ever bought a certified pre-owned car? Was it worth the extra cost?

—jgoods

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