Certified Pre-Owned Explained

You may have seen that many vehicles on EasyAutoSales are marked as "Certified Pre-Owned" (or "CPO") instead of the standard "New" and "Used." Certified pre-owned programs originated with luxury car makers like BMW, Mercedes-Benz, Lexus and Acura. These manufacturers had a proportionately large number of leased cars that were still well taken care of due to the nature of luxury car owners. Because these vehicles were in excellent condition and had lower than average mileage, manufacturers found they were in better condition than most standard "used" cars that came in for trade-in. As a result, they began to "refurbish" the vehicles and add warranties and special financing. This trend has been growing year by year and is quickly spreading to the majority of manufacturers who market their cars in the U.S.

An excellent example of what certified pre-owned offers above a standard used car is Lexus Certified Pre-Owned. Purchasers of a Lexus CPO car are treated to a full 3-year, 100,000 mile warranty (from the date of purchase) as well as new car financing rates and terms as well as 24-hour roadside assistance. As you can see by the above, a major draw of certified pre-owned program is a guarantee of a like-new car at almost used-car prices. Most factory-certification programs include 100-point inspection/reconditioning (though most include more), warranty coverage, and some amount of roadside assistance. A few, such as GM and Acura, even have a return/exchange policy. If a car fails the standard certification program of a manufacturer, this car is then sold as "used" so one never has to worry about purchasing a CPO car that's not been maintained as per the program details.

One of the most unique features of CPOs is that finance and lease deals are being extended to a used vehicle. Due to the nature of automobile depreciation, standard financing has never been an option. It's hard to convince a bank that a car is worth financing at low rates when it already has lost much of its value and the possibility of breaking would turn their investment into a quick loss. With the dealer backing the quality of the car in case something goes wrong, financing for these "used-cars" is now an option. Also, this is another feature that has turned many new car shoppers into used car buyers and continues to drive sales of CPO across the country.

Currently, certified pre-owned car sales make up over 40 percent of all used-car sales. One reason for certified used-car popularity is that these programs allow consumers to enter a market segment that they normally couldn't afford to enter, which many view is worth the added cost of certification. This certification has numerous steps and most cars use a combination of the following to determine if the car fits certified pre-owned standards or if it will just be sold as a used-car:

• VIN Inspection (emissions, service & recall, VIN code issues, etc.)
• Road Testing (automatic transmission shift points/slippage, drive axle, clutch, steering, brakes/ABS, gauge operation)
• Body Exterior (frame damage, accident repair, premature rust)
• Interior (airbag, dashboard operation, smokers car?)
• Powertrain (fluid leakages, water in oil, cylinder compression reading, timing belt)
• Fuel System (fuel pump, fuel lines, oil pressure)
• Suspension/Steering (control arms, ball joints, tie rods, tire wear, alignment)
• Brakes (calipers/cylinders, rotor, hydraulics, etc.)

Dealers and manufacturers market CPO vehicles because consumers like the the hassle-free shopping associated with CPO cars. Due to their increased value and piece of mind offered, CPO cars are worth more and generally sell for more money than regular used-cars. Savvy consumers can check CarFax for the title, purchase an extended warranties, and have their mechanic maintain and fix a used-car for much less money than you might be able to get a CPO car for. However, the "certified" stamp of approval comes with extra piece of mind that for the next few years, you will never be left stranded and you have a large brand standing behind the car you drive every day to work and take your kids to school in. Many consumers prefer the peace of mind that a certified used car offers and the simplicity of having a dealer check out the vehicle. In the end, it is up to the consumer to decide if certified is the way to go.