Is Certified Pre-Owned Right for You?
There has never been a better time to be a new car shopper, but there has also never been a more confusing time. As car shoppers, we have never had access to as much information. The product and pricing transparency has never been higher. The internet has given us a platform to shop in ways we never imagined before. But, now that we have all of this great information… what do we do with it?
Today we have more ways to buy a new car than ever before. You can buy a new car, lease a new car, buy a used car, lease a used car, or buy a certified pre-owned car. Now, what in the world does certified mean? Can just anyone certify a car? Can a dealer do it? Can your local mechanic do it? Does it come from the manufacturer?
Let’s explore the definition of Certified Pre-owned. Wikipedia defines Certified Pre-owned as a late-model car that differs from other used cars by having been inspected, refurbished, and certified by a manufacturer or other certifying authority. They also typically include an extended warranty, special financing, and additional benefits.
Certified Pre-Owned versus Used
A certified pre-owned vehicle typically costs more than a traditional used car. There are many that think the money is work it, while others think that you can get away with buying a traditional used car with an extended warranty. Certified pre-owned cars are inspected and used cars may or may not be. Most are just washed and put up for sale unless there is something noticeably wrong with the car and could inhibit its retail sale. This is especially important for things like breaks and tires that can drive up the cost of ownership.
Certified Pre-owned versus New Purchase
A new car is a new car. It comes out of the box clean and ready to go. It’s backed by the manufacturer’s warranty and gives you security and peace of mind that it will operated exactly like the manufacture intended. When you buy a new car, you are the first owner and you enjoy all that comes with it including the new car smell and the absence of scratches, dents, or wear and tear of a Certified Pre-owned car (even slight wear and tear).
The certified pre-owned comes with a warrantee too, but it does not come without its limitations. Typically the certified pre-owned car will have a shorter warranty that the original manufacture’s new car warranty. Additionally, most programs have some form of deductible that must be met whenever you bring the car in for service. The big difference here is the price of the certified pre-owned versus the new car purchase. The new car is going to cost a lot more. Depending on the age of your certified pre-owned you could save as much as 40% or more versus the cost of a new car. However, the amount of time with a near repair-cost free life is likely to be shorter depending on how long you plan to own your car. If you take a 5 year loan on a 4-year old certified pre-owned, the car will be 9 years old by the time you pay it off.
Certified Pre-owned versus New Car Lease
If you’re considering a new car, you have to decide if buying or leasing is your best choice. When CPO is compared to a purchase there is no doubt which is cheaper. A new car purchase will cost more both in total and monthly payment, but you get all of the things that come with a new car. Nevertheless, the gap closes considerably if you are thinking about leasing. The payments are very similar. Conversely, many of today’s lease programs require a down payment. Many times credit worthy borrowers don’t have to put anything down to make a purchase (new, used, or CPO). If you like the idea of ownership, then Certified Pre-owned may be the way to go. However, if you like the shiny new object every few years and the latest technology, a new car lease may be more your style.
Whatever your choice, your new(er) car should improve your transportation situation. Choose the option that fits your needs best. Good luck!