With new car prices reaching all-time highs, the allure of a
late-model used car can be rather tempting. But how do you know what you're
getting? Sure, you might save a few thousand dollars on the deal, but will you
end up paying it all back in repairs? This scenario has long been the fly in
the ointment for used car buyers, but there is a solution that can bring you
peace of mind and still save you money in the long run. It's called a certified
car, and you can buy one from just about any dealer who also sells new cars. In
this four-part series, we answer a few questions about CPO cars and whether one
is right for you.
What does certified pre-owned (CPO) mean?
A CPO car is one that is previously owned, usually with no more
than 60,000 to 80,000 miles and no older than five to seven years. (The time
and mileage warranties vary by manufacturer.) CPO cars are backed by the
original manufacturer, subjected to a rigorous, multi-point inspection and come
with an extended warranty from the original date of service good at any dealer
in the country.
What's the difference between certified pre-owned and used cars?
A CPO car comes with a complete inspection that repairs any
damaged or worn parts before being offered for sale. To get this same service
when buying a used car, the buyer must pay for an inspection and usually any
subsequent repairs. A CPO car includes an extended warranty, a limited
bumper-to-bumper warranty and a number of services, such as 24-hour roadside
assistance. A used car usually only offers the remainder of the factory
warranty and only if it's still in effect and fully transferable.
How does a car qualify for certification?
When the dealer acquires a used car, either through trade-in or
lease return, they will put that car through a rigorous inspection program
administered by a factory certified mechanic. If the car meets the
manufacturer's CPO qualifications, it is offered for sale as a CPO vehicle. The
most important factors for a potential CPO car are that it must be in excellent
condition, be mechanically and cosmetically sound and have low mileage. If a
car doesn't meet the CPO program requirements, it is either fixed or rejected
from the program. Each automaker has a different set of criteria, but the
bottom line is CPO vehicles are going to be the highest quality used cars to
begin with.
Who certifies the cars?
A CPO car is certified by the dealer and in accordance with the
manufacturer's specifications and requirements. Although the dealer does the
inspection and any repair work needed, the car is fully backed by the
manufacturer just as if it were being sold new.
What's the difference between certified and extended warranty?
An extended warranty is usually offered by the manufacturer when
the car is purchased new. It extends the factory warranty for certain parts and
may include a higher deductible as the vehicle ages. It may or may not be fully
transferable. A CPO car also extends the factory warranty, but includes
numerous perks, including loaner cars, roadside assistance and, in some cases,
rental car reimbursement, oil changes and even free trial subscription to
services such as XM radio.
What's the difference between certified and a service contract?
A service contract is coverage initiated by an independent
underwriter, not a manufacturer. These contracts are often advertised as
"Certified," but the agreement is fundamentally different. There are
numerous options with a service contract covering mileage and age. But a
service contract usually requires the buyer to foot the bill for repairs
upfront and then be reimbursed. You also run the risk of the contract
underwriter going out of business, thus nullifying the pre-paid contract. Also,
a service contract is essentially just break-down insurance, and these programs
are not backed by the automaker that originally built that car and there's
often no pre-sale inspection process. Some of these contracts only cover moving
parts or major mechanical components
Sources: http://www.autotrader.com/car-news/what-is-a-certified-car-196340
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