The average price of a new car is around $48,000. Meanwhile, the average price for a used car is around $27,000, almost half that of a new car. But what about certified pre-owned (CPO) vehicles? Exactly what is CPO?
Moreover, why do CPO vehicles cost more than regular used cars? The reason that the “CPO” designation brings a price premium over regular used cars is that it combines certain aspects of new and used cars.
When buying new, you get the peace of mind that the manufacturer backs the parts with a factory warranty. Most of the time when a part fails or your car breaks down, you can take it to a dealer and have them fix it at little or no cost. You may get other perks as well, such as free oil changes or roadside assistance.
But when you’re buying used car bargains, you save money on the front end in exchange for the possibility that something may break sooner rather than later. Yes, you can get a car that costs $50,000 new for less than $20,000 used, but it may have high mileage, cosmetic damage, and some of its parts may be on their last legs. There is no warranty or protection plan typically; that’s something you have to purchase yourself.
CPO vehicles may be used, but they are from recent model years and may have low mileage. They undergo a thorough inspection and refurbishment to bring them as close to new conditions as possible according to the manufacturer’s specifications for quality.
Then, they get a CPO warranty backed by the original automaker. That said, this is typically shorter than a new car warranty.
Advantages of Certified Pre-Owned Vehicles
So what is a CPO vehicle in terms of its advantages over regular used cars? Why pay the premium over what you could find at a used car lot? In fact, there are several reasons you might go the CPO route.
CPO Cars Get Thorough Factory-Approved Inspections
Perhaps you’ve been paying attention to used car tips and remember to get a pre-purchase inspection from a mechanic before you buy a used car. Even so, it probably won’t be as comprehensive as the quality assurance multi-point inspection done on a CPO car.
This is because a certified pre-owned car inspection is incredibly thorough and follows a checklist from the vehicle’s manufacturer. This means it will be as accurate as it can be.
CPO Cars Are Much Cheaper Than New Cars
The CPO vehicle gets the seal of approval from the manufacturer, and yet it’s still technically a used car, which keeps the price much lower than new. Depreciation, on average, will bring a car’s value down to 40% of its original price within 5 years. Merely purchasing a new car and driving it off the lot brings the value down by around 10%.
CPO Cars Have Transparent History
Shopping for used cars is a gamble because they may or may not have a complete history of repairs and maintenance. With a CPO car, you get all the information about the care of the vehicle back to when it first left the showroom floor.
CPO Cars Come With Perks
Because CPO vehicles get a factory-backed protection plan, you usually have service perks to take advantage of. These might include a period of free oil changes, tire rotations, roadside assistance, and rental car reimbursement.
Drawbacks of Buying a Certified Pre-Owned Vehicle
What is certified pre-owned (CPO) not offering that you can get with a regular used car? Here are a few drawbacks to consider before making your decision.
CPO Cars Are More Expensive Than Used Cars
If you compare two otherwise identical older vehicles, the one with the CPO certification will be more expensive. And since you can purchase a Vehicle Service Contract on your own, you may find an inexpensive used car with all the parts protection you need and still pay less than if you bought a CPO car.
CPO Cars Can Still Have Problems
Just because a manufacturer’s 150- or 200-point inspection is thorough doesn’t mean it’s perfect. It’s still a used car that could have been abused or damaged in ways the inspection techs didn’t catch. Also, sometimes, parts just fail. That happens on new cars, too.
CPO vs. Used: What’s the Difference?
What is CPO going to do for your bottom line? Is it worth the extra cash versus a regular used car? Let’s go over why you might prefer one over the other.
Age And Mileage
Used cars can be literally any age with any amount of mileage. If it is a car that someone else owned and is now selling, that’s a used car.
CPO cars have strict criteria according to manufacturer guidelines. Each automaker has its own specific CPO rules, but generally, the car must be no more than five or six years old and have less than 80,000 miles. Nonetheless, the threshold can be as low as 50,000 miles.
Condition
Unless you’re buying a recently restored classic, you’ll rarely run across a used car that could pass for new. Used cars vary greatly in their condition. It comes down to the amount of maintenance the owner does.
CPO cars generally do look quite close to new — and not just because they have to meet strict age and mileage guidelines. When a car is chosen to become CPO certified, its cosmetics get a refresh, too.
Certified Pre-Owned Warranties vs. Extended Coverage
There is a definite difference between CPO warranties and Vehicle Service Contracts. Consider these factors to determine whether you might want to choose one or the other.
Length of Coverage
CPO warranties are generally much shorter than new-car warranties. The length of the plan term for a CPO vehicle may be just a few years or even a single year and for as little as 12,000 miles.
That said, limited powertrain coverage often lasts longer. A Vehicle Service Contract can last much longer, depending on the plan — up to 10 years or 300,000 miles, or with a plan through CarShield you can pay monthly for as long as you want to cover your vehicle. This includes unlimited miles, roadside assistance, towing, and rental car options.
Type of Coverage
Since CPO cars are backed by factory coverage, buyers can get extensive coverage with factory OEM parts for repairs. Vehicle service contracts can also be quite comprehensive, but there are several plans to fit any budget and coverage needs.
Repair Options
Vehicle Service Contracts generally let customers choose their own repair shop, or companies like CarShield offer a concierge service to help find a mechanic in your area. The company may also allow clients to use non-OEM parts depending on quality and availability. With a CPO warranty, users are often limited to manufacturer dealerships and OEM parts.
Is Buying Certified Pre-Owned Worth It?
Unless you have the budget to buy a new car, you’re probably going to end up choosing between a used car and a certified pre-owned car. If you have the cash to buy one or the other, which is superior?
Buying a used car can pay off, especially if:
- The previous owner kept all their service records
- The previous owner always performed scheduled maintenance on time
- The car is an inherently reliable and durable model for sale at a reasonable price
You’ll get a wider selection of age and mileage ranges. One of the most important tips on buying a used car is that you can always buy a Vehicle Service Contract with fewer restrictions than a factory plan. Doing so will keep you from having to spend lots of money every time the car needs a repair.
However, if you want to replicate the experience of buying a new car without the new car price, you will probably want a CPO vehicle. You’ll be getting modern tech and conveniences, little wear and tear compared to most used vehicles, a factory-backed protection plan, and plenty of service perks. Furthermore, when your CPO warranty runs out, you can always purchase a Vehicle Service Contract to keep the coverage going.
Whether you purchase a certified pre-owned vehicle or a regular used car, you can keep the protection rolling with a plan through CarShield. Repairs can surprise you, both in terms of when they happen and how much they cost. Check out CarShield’s plans to fit your vehicle and budget. Then, contact us when you’re ready to protect your ride.
