CPOs may be the best compromise between the security of buying new and the financial benefits of used cars.
Buying a new car is generally both a very exciting and very expensive exercise; a necessary evil you say. Well, a CPO or Certified Pre-Owned program takes out some of the expense without compromising on the exciting bit. Buying a used car tends to be a hit-and-miss affair at times, however a CPO car comes with the manufacturer's backing and this can make all the difference. There are still some important points to consider and here we take an in-depth look at what it means to buy a CPO vehicle.
The often-quoted statistic of a new car losing 20% of its value as soon as it rolls off the showroom floor may not be quite so dire but there is no doubt that just about every new vehicle suffers the highest level of depreciation in its first few years on the road. Buying a CPO vehicle lets someone else absorb that steep initial depreciation and as most cars tend to come with additional luxury and convenience features when new, you will benefit from this as well.
Now not all used car dealers are shifty-eyed crooks but a modern car is a complex machine and a used one is inevitably going to have a few niggles as it gets older. Buying a used car from a smaller dealer may save you some money up front but if there is no warranty or recourse when things go wrong you may end up paying much more down the line. CPO cars all come with manufacturer-backed warranties, which often cover as much as what you get with a brand-new vehicle.
Dealer certified vehicles tend to be cheaper than CPO vehicles but they are not backed by the manufacturer and while they may have gone through a similarly thorough pre-sale check, they are not bound by any industry standard so it is really up to the dealer how thorough they want to be. In addition, if the dealer goes under so does your warranty. If you do not know your local dealer well, then the dealer certified route can be more of a gamble than going the CPO route.
In a word, no. In a few words, CPOs differ between each manufacturer however they are generally 6 years of age or newer and have under 85,000-miles on the clock. While a CPO vehicle will generally be listed above similar models from private dealers or individuals, the added safety net of a manufacturer backing can often be worth the slightly higher asking price. There are also certain perks such as free loan cars and free roadside assistance that you are unlikely to be offered if you buy privately.
CPO programs were initially offered by luxury car manufacturers in the 1990s but they have since spread to just about every vehicle manufacturer in the US. There are often great deals to be had on makes and models that tend to suffer high depreciation in their first few years, as is the case with large luxury sedans and certain premium SUVs. There are also benefits to be had when looking at lower end cars as small updates and changes to specification levels can see an influx of nearly new cars as owners trade in for the latest models.
CPO vehicles can be found on franchised dealer's lots and on their websites under the used cars section. Some manufacturers will also promote CPO deals from time to time, especially just before a new model is due to be introduced. This is done so that the dealers are not left with a lot full of previous-generation models and there are often rather lucrative financial incentives on offer.
Not if you don't want to. CPOs tend to come with lease deals as comprehensive as their brand-new counterparts and you can take advantage of many of the same perks as well. Lease packages often include a comprehensive warranty, roadside assistance and a multi-point inspection. There are often additional incentives to sweeten the deal too such as lower interest rates or longer repayment periods.
This is where a CPO really shines. Since a CPO by definition is a lightly used car, it will come with a comprehensive warranty. It's worth reading the fine print before signing a deal so you are aware of the components that are covered, however. Consumables such as brakes, tires and windscreen wiper blades fall under the wear and tear category and are unlikely to be covered. What you should look for are which drivetrain components fall under the warranty and for how many miles/years. Depending on the make and model, some CPO cars may even be offered with a longer warranty than that available on a new car.
So, in summary then, what a CPO deal offers you is a nearly new vehicle with much of the benefits and perks of a brand-new car at a slight premium over an equivalent model sold by a dealer or private individual. You may never have any issues with a car purchased from a reputable dealer or even the guy next door and in these cases, you will have saved some money as opposed to going the CPO route. However, if something does go wrong, especially if it is a big-ticket item, you may end up spending a lot more than you bargained for.