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Certified Used Cars: Deal or Not?


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Buying the Best Insurance by Eric Peters (10/28/2002)
New cars have undeniable appeal, even beyond the new-car smell and being the first one to program the radio presets. With a new car, it's a near-given that everything works. And if there's a problem, the warranty will take care of it. The downside, of course, is the new car price and the psychological gut-punch that comes from the alarming rate of depreciation that begins the moment you drive off the dealer's lot.

But savvy buyers know there's a way to dodge the depreciation hit and still get almost all the benefits of a new car purchase, most notably the peace of mind that comes with knowing the car you've just bought is going to start tomorrow morning — and that if it doesn't, you won't be left holding the bag.

The best route to budget-friendly, yet generally safe used-car buying is a manufacturer-certified, pre-owned car or truck – CPO for short.

CPO defined

A CPO vehicle is a late-model used car, most typically a two- to three-year-old model that has just been returned to the dealer at the end of its lease. There, the vehicle is checked by the dealer's service department and body shop, if cosmetic repairs such as fixing door dings are necessary. Anything that needs to be repaired is repaired, and normal service work such as brake jobs, front-end service, oil and filter changes, etc., is performed. Then the vehicle is given a multi-point inspection with the criteria determined by the automaker that built the vehicle.

Once the vehicle passes this inspection, it is ready for resale as a CPO car or truck, and is backed by either a comprehensive and/or limited powertrain warranty issued by the manufacturer that covers future problems, should they develop, just as if you were buying a brand-new vehicle.

Two factors make CPO vehicles possible. The first is the current glut of used cars. Literally millions of late-model vehicles are being turned in from leases every year. In 1999 and 2000, about 3.1 million vehicles were leased, and many of them will be returning to the dealer lots in the coming months.

The second factor is better reliability. These late model vehicles — like pretty much all cars built in the last few years — are exceptionally durable and well-built compared to the cars of the past. A two- or three-year-old car or truck with 20,000 or 30,000 miles on it is hardly broken in; even 40,000 is no big deal these days. Assuming it wasn't abused and the recommended service is performed, a late-model car can be expected to run reliably well beyond 100,000 miles. Even 150,000 miles is a solid bet, and 175,000 not at all uncommon.

Thus there are huge fleets of nearly new vehicles with most of their useful lives still ahead of them, looking for new owners.

Picking the best

In the past decade, automakers and their dealer networks realized it would be very good business to offer these vehicles for resale with organized manufacturer backing, dealer service and warranties comparable to new car warranties. And thus was born the idea of the certified, pre-owned vehicle.

You will pay a little more for the security of acquiring a CPO vehicle, regardless of make or model — on the order of a couple hundred bucks to $1000 or so, compared with a used car that isn't certified and is sold "as is."

Among the manufacturers offering CPO vehicles, some really stand out. These include:

Acura Certified Pre-Owned: In addition to a 12-month/12,000-mile "bumper-to-bumper" warranty that covers just about everything, those who purchase Acura CPO vehicles also get a seven-year/100,000-mile powertrain warranty with no deductible that covers the engine and transmission. Acura is also among the manufacturers that offers a three-day exchange provision, so you can back out of the deal if you decide the car is not for you. (Saturn also offers a no-hassle return policy, plus a 15,000-mile trade-in policy.)

Honda Certified Used Cars: Known for being bulletproof and endlessly reliable, it's no surprise that Honda feels confident backing its CPO vehicles with both a 12-month/12,000-mile bumper-to-bumper warranty -- and a powertrain warranty of seven years/100,000 miles. Intellichoice consistently ranks Honda CPO vehicles among the very best available.

Infiniti Certified Pre-Owned: Nissan's luxury line matches Honda with a similar 12-month/12,000-mile bumper-to-bumper deal on its CPO vehicles, as well as a very comfy seven-year/100,000-mile limited powertrain deal. Buyers also get a free wash and vacuum when their vehicles come in for service, as well as a loaner car, when necessary. Roadside assistance is also included in the deal.

Volvo Certified Pre-Owned: Buyers get the security of a six-year/100,000-mile warranty; this is one of the best CPO warranties currently available. Volvo also currently has an attractive 4.9-percent financing deal for 36 months. Roadside assistance is included with all CPO Volvo cars.

BMW Certified Pre-Owned: BMW backs its CPO vehicles with an impressive 24-month/50,000-mile warranty that picks up at the end of the original four-year/50,000 mile new car warranty.

Lexus Certified Pre-Owned: CPO vehicles are warranted for three years from purchase -- or 100,000 miles, whichever comes first. Lexus also offers special manufacturer-backed financing and interest rates.

VW Certified Pre-Owned: This automaker gives its CPO buyers a strong initial, bumper-to-bumper warranty of two years/24,000 miles (most are just 12,000 miles), and transfers the remaining balance of the original four-year/50,000 miles new car warranty. Be aware, though, that as with DaimlerChrysler and other manufacturers that have relatively low mileage limits on their powertrain warranties (anything less than 100,000 miles), you could be out of coverage very quickly if the vehicle you are about to buy already has close to 40,000 miles on it. VW currently has a 5.9-percent financing deal, and offers two full years of roadside assistance with any CPO purchase.

Hyundai: As with its new cars, which have ten-year/100,000-mile powertrain coverage, CPO Hyundai vehicles are sold with a solid warranty of six years/75,000 miles.

Chrysler National Pre-Owned: As part of ongoing efforts to restore buyer faith in Chrysler-branded vehicles -- there were some quality-control issues in the mid-1990s -- this automaker recently announced an eight-year/80,000 mile CPO warranty that runs from the original sales date. The key thing with these vehicles is to find one with under 40,000 miles to maximize the warranty. Do your math, too, and figure how many miles you typically drive each year, so you can figure what the "real world" duration of your warranty is likely to be. DaimlerChrysler also offers a $30-per-day rental car allowance when your CPO vehicle is in for service work, as well as 24-hour roadside assistance.

Jaguar: Another pretty safe bet in a near-new luxury vehicle. Jaguar offers a six-year/100,000-mile CPO deal — along with a very low 1.9-percent finance rate.

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