What Does Certified Pre-Owned Mean?

The term certified pre-owned (CPO) often comes up when considering buying a new or used car. New cars come straight off the production line but cost more. Used cars tend to be more affordable, but CPO cars are somewhere in between. 

Almost every automotive manufacturer offers CPO cars, depending on the brand. A particular dealer can only put pre-owned vehicles of the same brand through the CPO program. Otherwise, the certification is arbitrarily established by individual dealers. Most certification programs include the following requirements: 

• Six or seven years old
• Between 50,000 and 80,000 miles 
• No major mechanical, electrical, or additional problems

For instance, a Ram 1500 that’s six years old with 75,000 miles could qualify as a CPO car. However, only a Ram dealership can offer a truly CPO Ram 1500. If a Honda or Subaru dealer were to offer a CPO-like certification, the standards might not be equal. 

Certified pre-owned cars can definitely be worth it, especially if you’re looking for peace of mind. If you come across a CPO car, ask for documentation to verify the authenticity of the certification. You can also clarify with a salesperson what qualifications the CPO cars must have to obtain this distinction. 

Certified pre-owned vs. used cars

One of the advantages of buying a used car is that you pay less than you would if the car was new. However, CPO cars come with additional perks such as: 

• Vehicle history report
• Extended warranty coverage
• Bumper-to-bumper or powertrain warranty 
• Free satellite radio (if equipped)
• Roadside assistance
• Loaner vehicle access  

Because CPO cars have undergone extensive testing, it’s typically a waste of money to obtain a pre-purchase inspection. However, you shouldn’t take certification as a completely clean bill of health. Instead, focus on what certifications and warranties don’t cover and how soon they expire. 

How does a car qualify for certification?

Dealerships can only certify cars under the same brand. For example, only Ford can sell CPO Fords, while Jeep can only sell CPO Jeeps. If you run into a CPO car that doesn’t match the brand of the dealership where it’s located, be cautious. One of the best questions to ask when buying a used car, especially a CPO car, is if you can see documentation. 

Specific requirements to qualify as a CPO car vary between dealers. You can often find the loose requirements for CPO cars online or by asking a salesperson. Note that dealerships under the same brand name may vary their CPO requirements based on location. A Nissan dealer in Florida may not have the same CPO certifications as one in New York. 

Nonetheless, dealerships nationwide are subject to monthly CPO quotas. The dealership must certify and sell a set number of CPO cars every month to earn rewards from the manufacturer. Note that dealerships do have to pay for this certification, so it’s not a qualification to take lightly. Most CPO cars maintain their value better than your typical used car that’s not certified. 

Warranty coverage for your new or used car can make a huge difference in covering potentially budget-bursting car repairs. The factory warranty may be close to or already run out on a CPO car, depending on its age. After all, most new cars come with a three-year bumper-to-bumper warranty, which is short considering many dealerships lease out vehicles in the first years of their lives. 

An extended warranty offers similar coverage to a manufacturer’s warranty, though you may have to purchase a powertrain warranty to address that part of the car. If you choose a limited warranty, remember that most warranties of this kind don’t include labor. For labor to be covered under warranty, you must make a claim and demonstrate its validity.  

CPO cars typically cost less than brand-new cars but more than used cars. A CPO car costs more because the dealership hand-picked it as a like-new car with additional perks. While you typically pay for the perks through the dealer’s markup, sometimes the included services can make a huge difference. 

For instance, if you were stranded on the side of the road with a dead battery, your CPO car may include roadside assistance. One phone call could have you back on the road without a bill. In addition, you gain priority in obtaining a loaner when your vehicle is in the shop for repairs, meaning you don’t have to worry about arranging additional transportation until your car is ready. 

Dealers may be willing to negotiate on the price of a CPO car at their discretion. However, it’s not cheap to certify a pre-owned car, so you’ll likely only be able to negotiate the price down so far. Some dealers offer no-haggle pricing on CPO cars because they know the value is already built into the certification. 

Is purchasing a certified pre-owned car right for you? Consider the following advantages and disadvantages of buying a CPO car before deciding. Determining what you’re looking for in a vehicle can help you decide. 

Pros

The advantages of choosing a CPO car often make a better case for going this route than the disadvantages. Below are the common benefits of buying CPO cars: 

• CPO cars are often current production models
• Buying a CPO car can potentially save you money on costly repairs, especially on luxury models 
• CPO cars typically cost less than brand-new cars
• These cars are often hand-picked for quality
• Many CPO cars come with additional perks based on individual dealership offerings 
• A CPO car can be categorized as a low-risk purchase

The one wild card here is which particular dealership you visit to peruse CPO cars. Depending on your location and which brand(s) you’re researching, you’re bound to find unique perks at every turn.   

Cons

At their core, CPO cars are still used cars. They’re also mechanical objects prone to breaking down as components wear out and parts wear. Consider the following disadvantages of CPO cars: 

• A car’s odometer only tells part of the story. Even cars with less than 10,000 miles can quickly go from brand-new to well-loved with just one owner. 
• If you thought finding a used car that fits your needs was hard, try finding a CPO car with the same features. Solving your transportation needs may take longer, depending on inventory levels. 
• Not all certifications are made equal. Pay attention to and make note of what makes a particular car certified on each dealership lot you visit. Ask if certifications transfer with the car or the owner. 
• CPO cars have higher price tags than your average used car. Whether or not that price increase matches the increase in value is a question only you can answer. 
• You must follow the manufacturer’s recommended maintenance schedule to avoid rendering the warranty null and void. These requirements may also restrict where you can have your vehicle serviced. 

Sometimes, taking a different approach can help you sort through CPO and used cars. If you were to buy a particular CPO or used car, what components would you likely have to repair or replace within the first five years? Answering that question can give depth to your conundrum. 

Many people consider certified pre-owned (CPO) cars worth it, especially given how complicated and expensive it can be to repair a car these days. CPO cars help buyers identify valuable assets that come with more than just your average dealer purchase. Confining your search to CPO cars only can also help you weed out any lemons and narrow the field. 

Before you purchase a CPO car, however, take a moment to read the fine print. Know the difference between a dealer-certified pre-owned car and a manufacturer-certified one. CPO cars still warrant a test drive, if only to see if you’re comfortable behind the wheel. You should also ask the sales team for more information on how the car was certified and what those certifications reveal about it. 

Instead of purchasing a CPO car and figuring out the best way to sell a used car once you tire of it, choose a FINN car subscription. FINN offers low-mileage vehicles that are clean and ready to drive you to your various engagements. After FINN delivers your new vehicle straight to your door, you pay a single monthly payment that covers practically everything besides fuel.