For drivers on a budget, buying a pre-owned model is easier on the wallet. Sometimes, though, car buyers can feel uneasy about buying used because they’re worried about the car’s reliability and lack of warranty. That’s where certified pre-owned (CPO) cars come in. They help you minimize the risk of buying used and help you get more car for your money than you do with a new car.
What is a certified pre-owned car?
To help you understand this promising alternative to buying either a brand-new car or an old clunker, let’s take a look at what a certified pre-owned car is. Almost every car maker has a program that certifies pre-owned vehicles of their brand. The used cars come from a few sources and are most often the best of the automaker’s lease returns and trade-ins.
Certified pre-owned cars are thoroughly inspected and carry a factory-backed warranty. What’s more, some CPOs are offered with factory-baked financing packages. Because automakers are responsible for any issues concerning reliability, CPO cars are overwhelmingly cars from recent model years and with lower odometer numbers. For the same reason, a certified pre-owned vehicle will cost more than a non-certified used car of the same model.
CPOs come with factory-backed warranties
All certified pre-owned cars carry a factory-backed warranty. Because the warranty is administered by the automaker rather than a dealer, it will be honoured at all of that make’s dealerships. It’s the main reason why factory-backed warranties are better than independent ones. The fact that CPO programs offer them is one of the most valuable aspects of buying a certified pre-owned vehicle. It’s an advantage that compares favourably with buying new.
First introduced in the 1990s, CPO programs have since been expanded to include roadside assistance, Carproof reports, and, sometimes, the car’s first oil change after purchase. Some even offer a benefit new car buyers don’t even get. That is, a few CPO programs allow dissatisfied customers to exchange their recent purchase for another CPO car. That’s an advantage that’s hard to beat.
Let’s do the math. In 2016, Mazda Canada estimated that the certification process was worth $4,143. In the same year, BMW Canada valued the process at $7,930. Those numbers represent the monetary value of all the benefits CPO programs offer, including the factory-backed warranty and financing, roadside assistance, and the like. That’s a lot of value for the few hundred dollars more you actually pay when buying a certified pre-owned car over the equivalent used model.
CPOs come with factory-backed financing
Factory-backed financing is the CPO equivalent of new car financing. It means that you can get more car for less money compared to buying new. If you’re looking at luxury vehicles, for example, opting for a certified pre-owned car means you can upgrade vehicle class without blowing your budget.
Let’s crunch some numbers while comparing certified pre-owned cars to new cars. A 2014 used BMW 3 Series sedan with xDrive (4 years old, in other words) may cost as little as a new Honda Civic Coupe from the 2018 model year. Even a 2014 used BMW 5 Series Gran Turismo, say, with low mileage, will have a price equivalent to a new Toyota Avalon, for example.
CPOs and luxury cars
In general, luxury cars tend to have higher running costs than more mainstream models. Let’s take a look at used Audi Q5models as an example. At the time of writing, ontariocars had 4 of the same 3.0L TDI Progressive trim level from 2016 listed – 2 regular used vehicles and 2 certified pre-owned vehicles with quite low mileage. Despite the rather large difference in kilometers on the odometer, the certified Audis are not significantly more expensive than the crossovers without the CPO. In other words, for a few hundred dollars more, you get a factory-backed warranty and factory-backed financing.
In this case, the higher purchase cost means you will save on financing interest. And the higher cost of repairs makes the manufacturer’s warranty particularly interesting. As a general rule, it’s especially advantageous to buy a used European luxury car with the added protection of a certified pre-owned program.
In short, CPOs take the gamble out of buying used. You get all the assurances that a new car provides with the lower price a used car offers. It seems odd, then that Canadian statistics show that about 33% of used cars are re-sold via dealerships and less than 25% of those are certified pre-owned vehicles. That means that less than 5% of car buyers in Canada are taking advantage of one of the best deals around. You’re smarter than that, right?
Don’t miss out on what CPOs can offer when searching for a used car. Give ontariocars.ca a try and search through our used car listings. You can search by make, model, year, body type, drivetrain, and other filters to help you zoom in on models in your neighbourhood.