Certified Pre-Owned (CPO) Vehicles: Be Protected

April 6, 2011

Maybe it’s because I was Internet Manager for a major car dealer that friends and family are always asking me for help when they buy used cars. Most people only buy a handful of vehicles in a lifetime and for many it’s a nervous-making experience where they could use some help. I usually oblige.

However, almost as an act of self-protection, I tend to steer family and friends towards certified pre-owned (CPO) vehicles. I don’t want to be blamed if anything goes wrong with the vehicle after they purchase it.

CPO vehicles are used cars, trucks, or SUVs that are sold by a dealer, they meet a higher standard, and they carry an extended warranty and other benefits from the manufacturer. The length and term of the warranty vary by program, along with the added benefits, which can include roadside assistance, trip interruption, a free vehicle history report, and other goodies.

A CPO vehicle takes much of the risk out of buying a used car. First, each manufacturer sets standards the dealer has to follow. A vehicle chosen for certification by the dealer must:

  • only be a few years old with a limited number of miles.
  • pass an extensive mechanical inspection with any deficiencies repaired, usually with factory approved parts.

Most programs don’t allow vehicles to be certified if they have been in an accident, or have other negative issues that show up on its vehicle history report, such as odometer rollback concerns.

More expensive?

Consumers generally pay a premium when buying a CPO vehicle. Let’s take a look at two current examples to see how much more you can expect to pay. We begin in Houston, Texas where a 2008 Ford Escape XLT with a V-6, four-wheel drive, and 40,000 miles will have an initial asking price at a dealership of $20,110. The same vehicle—at the same dealership—sold under the Ford Certified Pre-Owned program will have an asking price of $20,610, or $500 more.

What about a high-end sedan? In Los Angeles, California a 2008 Lexus ES350 with 40,000 miles will have an initial asking price of $27,185 at an area dealership. That price goes up by $1,000 to $28,185 if sold under the Lexus CPO program.

These figures are from Kelly Blue Book (kbb.com) and represent the dealer’s initial asking price. This is before sale prices, mark downs, and negotiations. This means that the actual price that a consumer pays for a certified vehicle will vary.

I have seen a combination of market conditions and a customer’s superb negotiating skill reduce the price of a CPO vehicle below what they would expect to pay for a non-CPO vehicle at the same dealership, and even as low as a private party price. Good news for savvy buyers: the benefits of a CPO program don’t diminish even if you make a steal-of-a-deal on the certified car itself. It pays to do your homework and shop around.

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