People choose to buy new cars for many reasons. Not only do they come with that amazing new-car smell, but they also offer you the chance to be the first owner. One of the biggest reasons that people buy new cars is that they don’t trust the quality of those that are used.
The problem with new cars is that they’re pricey. This is where a certified pre-owned car comes in. It’s not sales fodder — that certification can give you peace of mind. Here’s what you need to know about certified pre-owned cars.
What Makes a Pre-Owned Car Certified?
A certified pre-owned car is a used vehicle that has the backing of a carmaker’s guarantee. In most cases, they are newer autos that were on short-term leases. To qualify as a certified pre-owned car, a vehicle must have less than 60,000 miles on it. Car dealerships complete a rigorous assessment on these vehicles. These vehicles include extended warranties, and they may have additional perks such as subscriptions to satellite radio or even roadside assistance.
When people buy cars, some owners abuse them by not getting the oil changed regularly or driving with the “check engine” light on. A great way to save a few bucks on your vehicle purchase without worrying that you’re buying something that’s going to break down unexpectedly is to select a certified pre-owned car.
It’s become more popular for people to buy certified pre-owned cars because there are more used cars available now than ever. Throughout the United States, vehicle sales are healthy. For instance, more than 17 million vehicles were sold in 2019. Also, about a third of the vehicles were purchased on a lease. The large influx of vehicles has resulted in automakers seeing a constant stream of cars, trucks and SUVs that are just two or three years old and have low miles, making them perfect additions to their certified pre-owned programs.
Certified pre-owned vehicles are more expensive. Plan to pay from 6% to 8% more for a certified pre-owned car than you would for a regular used car. This will add something like $1,000 to $1,500 to the price of your car.
What do you get for the additional money? A factory-educated mechanic will complete a 150-, 160- or 180-point inspection of the used car. They’ll even check to see if anything on the vehicle has been recalled.
If any time is remaining under the vehicle’s new car warranty, then this will be transferred with the car. You can also expect a certified limited warranty that will likely last for 12 months or 12,000 miles, whichever comes first. Every certified used-vehicle program is unique, but when it comes to warranties, look for a company that offers bumper-to-bumper protection, the same as what is provided with new cars. Some programs add additional powertrain warranties that extend the coverage based on the age of the car or the miles that you put on it.
Warranties offer peace of mind when you’re purchasing a certified car. A warranty confirms your total cost of owning the car during the years when it is in effect because you won’t have to worry about unexpected repairs. Review the warranty information closely. Some programs add an extension to the factory warranty while others offer the protection from the day that you purchase the used vehicle.
Your certified pre-owned vehicle should also come with a history report of the car. It may even feature a buyback program or a purchase protection program. These programs add even more confidence to your used vehicle purchase.
Certified Pre-Owned Vehicles May Qualify for Low-Interest Financing
While certified used vehicles cost more than similar vehicles that haven’t gone through the certification process, this type of car may qualify for low-interest financing. You may even be able to buy one with a rate that’s as low as it would be on a new vehicle. If you qualify for a low rate, then your monthly car payment will be lower. This may offset the higher vehicle price.
Leasing options are sometimes available with certified used vehicles. This can be a way to afford a more expensive vehicle. Some car dealerships offer free maintenance with their certified pre-owned vehicles. With most dealerships, this includes oil changes and tire rotations. It may also come with free vehicle inspections.
Some programs will allow you to return a certified used vehicle and exchange it for a new one within a particular time period.
Most certified pre-owned cars have not been involved in a major collision. Before considering a vehicle for their certified program, most dealers check the automobile’s repair records. A vehicle that had slight body work may qualify, but any vehicle that has had damage to its frame would likely be excluded.
Keep in mind that different programs allow different things, so it’s a good idea to check the details of the dealership’s certification process. Also, records aren’t always accurate. Before buying any used car, consider taking it to an independent mechanic for an assessment.
They Are in Your Budget
When certified pre-owned cars first appeared on the scene, they were offered by luxury brands like Mercedes-Benz, Lexus, and BMW, but today, non-luxury brands offer them as well. You can get a certified used Kia, Hyundai or Toyota. If you choose a certified non-luxury brand, your warranty may not be as long as one offered from a luxury automaker, but you will likely pay less for your car.
Certified Pre-Owned Vehicles Offer Value
A big advantage of purchasing a certified pre-owned vehicle is that they offer you value. This type of vehicle has already gone through depreciation, which means that your money can get you more. It might even allow you to purchase the luxury car that you’ve longed to have. For instance, you may be able to drive around in a Mercedes, Lexus or BMW, one with the ventilated seats and the turbocharged engine.
What’s the Difference Between a Dealer-Backed and a Manufacturer-Backed Certified Pre-Owned Program?
Manufacturer-backed programs are developed separately by a vehicle manufacturer. Each one has its own list of requirements. However, they may feature similarities. For instance, a Honda vehicle becomes certified after it passes a 182-point inspection.
Audi vehicles must pass an inspection of more than 300 points. In most cases, manufacturer-backed certification vehicles are sold through the car company’s franchised dealers.
Dealer-backed certification programs are developed by a dealer instead of the car manufacturer. This means that the inspection process is more likely to vary because the checks are not required to follow one car company’s standards. These programs are unlikely to include a manufacturer-backed warranty, but you may find one that offers a warranty supported by the dealer.
A few years ago, Edmunds conducted a survey of used car shoppers. In the survey, the car publication asked consumers about their feelings regarding certified pre-owned vehicles. An estimated 88% of the surveyed shoppers confirmed that they were willing to pay a higher amount for a vehicle that was certified by a reputable dealer. About 37% of them confirmed that they would spend as much as $1,000 more for a certified vehicle while around 36% said that they would go as high as $500 more for a certified pre-owned car.
Jessica Caldwell, Edmunds Director of Industry Analysis, said, “More and more shoppers are opening their eyes to the benefits of certified pre-owned vehicles.” She added, “These cars offer a unique value proposition to shoppers who want to pay used-car prices but demand the peace of mind that comes with a new car purchase.”
The Edmunds Q3 Used Vehicle Market Report for 2015 confirmed that certified pre-owned vehicles made up about 22% of used car sales processed through dealerships from mid-summer to fall. This percentage jumped from 18.4% in the Q3 report for 2010. People like to buy certified vehicles during the holiday season. Edmunds determined that December was the month in which more people bought certified used cars in seven of the eight years from 2007 through 2015.
The used car market is a hopping one. 24/7 Wall St. reported that during the second quarter of used car sales in 2016, an estimated 9.8 million vehicles were sold. Of those, around 22% were certified pre-owned vehicles. This area of the used car market clearly does well and reports consistent sales numbers.
Certified Pre-Owned Cars Offer Peace of Mind
Buying a car is an exciting experience, but it can also be stressful. For most consumers, a vehicle purchase is big and somewhat scary, but when you buy a certified pre-owned car, you’ll have the confidence of knowing that the vehicle has received a thorough inspection. Certified cars usually come with extensive warranties, and they may even include maintenance packages. Buying a certified vehicle gives you valuable peace of mind.