What You Should Know About Certified Pre-Owned Cars [2021]

Last Updated on July 23, 2021 by Jason Mason

The sustained increase in new car prices in the United States, along with the current state of the economy, makes paying for a new car harder than ever.

In this guide, we will explore an increasingly popular alternative, which combines the peace of mind of a manufacturer-backed extended warranty with a competitive price. Buying a Certified Pre-Owned (CPO) car.

What does a certified pre-owned mean?

A certified pre-owned vehicle is a car that meets the following conditions:

1. Has been thoughtfully inspected by highly trained technicians
2. Has been refurbished to a “like-new” condition using original parts
3. Depending on the brand, CPO cars are usually six years old or newer and have less than 80,000 miles
4. The overall “good condition” of the vehicle is backed both by the brand and the dealer. 

Additionally, most CPO programs offered by manufacturers have many exclusive benefits similar to those included when you buy a new car:

• Most certified pre-owned cars include an extended warranty ranging from one to five years. Some brands also have the option to purchase “elite” plans that extend the warranty even further, as well as special maintenance plans that help reduce upkeep costs. 
• Most brands offer special financing plans for their certified pre-owned cars including low rates, deferred payments, special promotions, more.
• In many cases, certified pre-owned vehicles come with additional benefits and incentives such as no-cost maintenance programs, free roadside assistance, and more

What is the difference between used and certified pre-owned cars?

Contrary to certified pre-owned vehicles, most (if not all) used cars have in common the following:

• You are purchasing the car “as-is, with no warranty” Meaning that in most cases the seller will not assume responsibility for any repairs after the sale.
• Used cars are not inspected in the same way as certified pre-owned vehicles. CPO vehicles have to pass strict quality control to earn their “certified” status. On the other hand, used cars are inspected mainly to verify what they are worth.
• Used cars are rarely repaired before they are sold. Moreover, in the few cases where they are repaired, it is with the sole purpose of increasing their value, therefore, aftermarket parts are preferred over original parts
• When you buy a used car, you only have the seller’s word about the condition of the car. There is no formal inspection, so there is no written report on the condition of the car. That is why we strongly recommend that you hire an expert to perform a thorough inspection to determine the real condition of the vehicle. 

Since the reputation of the brand is at stake when certifying a car, it is unlikely that you get a “lemon”. However, even if you do get one, you have a generous factory-backed warranty.  Some brands even offer “return programs” to further strengthen consumer confidence when purchasing a certified car.

Is it worth buying a certified pre-owned car?

Absolutely. The peace of mind of having an extended warranty makes paying for a certified pre-owned car worthwhile. Furthermore, when you buy a CPO car you also enjoy other benefits such as:

• In order to spend less on costly repairs and reconditioning, dealerships usually select “like-new” cars for the CPO program
• Most certified pre-owned cars have low mileage
• While it is not impossible, hardly you will find a certified pre-owned car that has been part of a major collision
• As mentioned earlier, certified pre-owned cars are offered with attractive discounts, promotions, and special rates that close the price gap between them and regular used cars
• Brands frequently offer special maintenance programs that could save you good money in the long run

Why CPO vehicles cost more than “regular” used cars?

Simply put, certified pre-owned vehicles cost more than regular used cars because they offer unsurpassed value. Certified pre-owned cars’ higher upfront cost is compensated by their lower maintenance costs, the peace of mind regarding their mechanical condition, and their great resale value.

Can you negotiate a certified pre-owned price?

Absolutely. Nothing prevents you from negotiating a better deal, even if the dealership is offering a fair price. However, as it happens in most situations, the likelihood of getting a better deal is hugely influenced by your credit score and other factors such as how much you are willing to pay upfront.

How Certified Pre-Owned programs work

Certified pre-owned programs vary from one brand to another, nevertheless, one thing they all have in common is manufacturer and dealership interest in making sure the vehicles are top-quality. CPO programs are highly profitable for parties involved, which explains why these vehicles are often treated the same way as new cars.

Regardless of the brand, cars that intend to earn the Certified Pre-Owned Badge go through the following process:

1. Visual inspection. Savvy dealer appraisers select “the best” late-model cars returning from leasing programs as well as those acquired from exclusive dealership auctions, and other means. In most cases, vehicles older than 6 years cannot be part of the CPO program no matter how good they look or how well maintained they are
2. Vehicle History Report (VHR) check. Aside from the mandatory VIN check, dealerships perform a comprehensive examination of vehicle’s documentation and maintenance records, to ensure that the car was properly maintained, as well as it has a clean title. Salvage cars, cars found with odometer rollback titles, and poorly maintained car are automatically discarded for the CPO program
3. Vehicle reconditioning. A thoughtful technical inspection is done. Any minor issue is corrected using original parts. Once repairs are done, both the interior and the exterior is fully detailed 

Once the process is completed, the car is officially backed up by the manufacturer with a bumper-to-bumper warranty that varies depending on the brand.

How much more does a CPO car cost in comparison to a regular used car?

That is a valid question since the whole point of buying a second-hand vehicle is saving money. If you search Google, you will find that most information sites offer a rather vague estimation. The “premium” you pay for a CPO car is said to be between $1,000 and $3,000 depending on the brand, model, year, options, etc.

So we did our independent research, based on the average prices published by NADAguides. What we found is that the price difference (even for luxury cars) is lower than what most people might think. That is why we decided to create a “Used/CPO Ratio” which consists of dividing the “clean title” used car price and price of the certified pre-owned car. 

Used/CPO Ratio = (Clean title used car price ÷ Certified Pre-Owned car price) x 100

Moreover, to ensure that all brands received the same treatment, we chose to use the brand’s best-selling model for 2017 in each comparison. 

The purpose of this innovative used/CPO percentage is to make it easier for you to compare brands’ CPO programs. The lower this number, the smaller the gap will be between the price of a regular used vehicle and a CPO vehicle, which would clearly indicate that it is worth buying the certified pre-owned car.

What is the best certified pre-owned car to buy?

Glad you ask. We have put together a comprehensive review of the top CPO programs from different brands so you can choose the one that best suits your needs.

Acura Certified Pre-Owned

Acura’s Certified Pre-Owned Program is known for offering free of charge many extra benefits usually found in paid-plans. Among these benefits are comprehensive roadside assistance, concierge service, Hotel privileges directory, and trip-interruption services.

The generous 24-month/100,000-mile warranty and good used/CPO value ratio, unquestionably makes this program quite attractive as an alternative to buying a brand new Acura.

What We Like

• The 24-month extended warranty is a big plus over the conventional 12-month warranty offered in other CPO programs
• A lot of extra benefits at no additional cost
• Good Used/CPO ratio, on average, you only pay 6.20% more when compared with a clean retail Acura
• No deductibles and easy transferability of warranty

What We Dislike

• Only the first maintenance is free, in case you are interested in saving on upkeep costs, you will have to pay for a scheduled maintenance plan 
• The 6-year or 80,000-mile limit of the Acura CPO program is pretty relaxed for a luxury brand

Audi Certified Pre-Owned

Hands down, Audi’s certified pre-owned program is one of the best in the industry. The comprehensive 300+ point inspection, along with the detailed CARFAX Vehicle History Report, gives you peace of mind about the condition of the car. Add the incredible quality of Audi vehicles, and you definitely will have little to worry concerning maintenance or repair costs for a long time. What more could you wish for?

What We Like

• Audi’s extended Warranty offering 12-month with UNLIMITED miles is a HUGE advantage
• 300+ checkpoint inspection
• Amazing Used/CPO ratio, on average, you will only pay 5.80% more when compared with a clean retail car
• No deductibles and easy transferability of warranty

What We Dislike

• No free maintenance plans. However, the astounding 300+ checkpoint inspection partially compensates it. Still, you can always buy a prepaid scheduled maintenance plan to minimize your upkeep costs if you want.
• No factory-backed exchange/return program, however, some dealerships may offer this option

BMW Certified Pre-Owned

When buying a second-hand luxury car, such as a BMW, it is always a good idea to favor vehicles part of the certified pre-owned program. The reason is simple. Repairing a BMW is not cheap. If you do the math, paying 6-7% more you can potentially save thousands in costly repairs. Luckily, the BMW CPO program was designed with that in mind. The “regular” certified pre-owned BMW comes with an ample 12-month/unlimited miles extended warranty, which is more than adequate for the average driver. However, in case you plan to keep the car for more than two years, then you have the Ultimate Protection Plan which extends the warranty even further, up to 7 years. Another alternative is opting for BMW’s Elite CPO program, which only sells vehicles with less than 15,000 miles. Unsurprisingly, you will have to pay more. But depending on the vehicle and seasonal promotions, it might well be worth considering it.

What We Like

• BMW’s 12-month/unlimited miles extended warranty that rivals Audi offerings directly
• The optional BMW Ultimate Protection Program gives you even more protection
• Good Used/CPO ratio which closes the gap between regular used car and factory-backed BMW vehicles

What We Dislike

• $50.00 handling charge that must be paid per each repair visit
• No free maintenance plans. However, you can compensate this either purchasing a scheduled maintenance plan or a Ultimate Protection Plan 
• No factory-backed exchange/return program, however, some dealerships may be willing to offer you this as an option

Cadillac Certified Pre-Owned

If you love Cadillacs, then the good news is that the brand’s certified pre-owned program makes it pretty easy to purchase one in a “like-new” condition. No doubt, Cadillac certified pre-owned cars are among the best offered by General Motors.  They have a six-year extended warranty in the powertrain and a two-year warranty for other components. It is certainly reassuring having such an extensive warranty. But it gets even better. Only vehicles under four years old with less than 50k miles are selected as part of the CPO program. This way, Cadillac is ensuring you are getting only vehicles that are truly in “like-new” condition. No deductibles, 3-month OnStar trial, and other benefits complement what is, in our opinion, an excellent opportunity to purchase a nice looking luxury car at a fair price.

What We Like

• Backed up by GM’s awesome warranty
• Cadillac vehicles part of CPO program have low mileage and are only 4 years old (at most)
• Decent Used/CPO ratio, on average, you only pay 6.12% more for purchasing a certified pre-owned Cadillac

What We Dislike

• No free maintenance plans. In case you are interested in saving on upkeep costs, you will have to pay for the Premium Care Maintenance plan 
• No factory-backed exchange/return program, only dealer backed exchange programs, that in some cases are part of an optional package 

Chevrolet Certified Pre-Owned

Chevrolet’s CPO program is without a doubt one of the most comprehensive on the market. You not only enjoy the incredible 6-year  powertrain extended warranty, but also free maintenance visits, a flexible return program, and more. This is definitely a program designed to eliminate the excuses that keep you from buying a Chevy at a competitive price.

What We Like

• General Motors’ dual extended warranty
• Excellent scheduled maintenance program
• One of the best Used/CPO ratio in the market, on average, you only pay 5.1% more to get an amazing certified pre-owned Chevy

What We Dislike

• Base extended warranty (12-month/12,000-mile) is rather low for work-focused vehicles like pickup trucks
• Powertrain warranty starts from original sale date, not CPO purchase date