CPO Cars Costing Too Much?

CPO January

Because buying a used car is always risky, there has been a big rise in sales of certified pre-owned (CPO) cars. The reason is simple: It’s a way to hedge your bet, because the car comes fully inspected, reconditioned if needed, and offers some kind of warranty or service contract.

And it’s the warranty that adds the extra cost—$800-$1,500 more than non-CPO equivalents. In fact, these cars sometimes cost more than equivalent new models. If you are contemplating buying a CPO car, there’s a very good article on what is happening in that market, and much of what I’m telling you comes from that source (or from my brilliant, common-sensical mind).

To really find out where you would stand buying a CPO car, you need to figure cost of ownership over five years (depreciation, repairs, interest). Available incentives also can figure in, and of course used cars are more expensive to finance than new ones.

We gave you some thoughts about whether to buy CPO or new back in January, and the used-car market is still hot enough to force consideration about whether the extra cost of CPO is worth it.

CPO BenzThe carmakers love it, of course, and it helps their dealers move recent stock. With many clean late-model used vehicles bringing a premium, why wouldn’t they? So you’ve got to be smart when you’re shopping and really do the numbers. MSN Autos offers examples:

Consider that a popularly equipped 2011 Toyota Venza has a retail list price that is $755 lower than an equivalent 2009 model in top condition, according to data from Black Book in Gainesville, Ga., which has been tracking and publishing vehicle valuations for 56 years. Likewise, a 2011 Audi Q5 has a list price $620 lower than that of a 2009 model.

And they go on to list more examples at the end of the article. Here’s another surprising one: A V8-powered 2-wheel drive 2011 Toyota Tundra Double Cab can cost up to $3,141 less than its 2009 equivalent, because of a $3,000 cash incentive. And, as you can see, the new Tundra would still be less than the used one even without the incentive.

As always, your best resource in checking used-car prices is our DealFinder. Buying a new car instead of a used one may be counter-intuitive, but right now it may also make sense.

Have you used DealFinder lately to check prices? Tell us about it.

—jgoods

Find Used Cars in Your Area at CarGurus

Used Toyota Venza
Used Audi Q5

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