There are tons of words thrown around in car advertisements: new, brand-new, used and certified pre-owned. Brand-new may be a fancy way to say new, but a certified pre-owned vehicle is much more than a dressed-up definition of used. We break down what it means to buy a CPO, if you should get one, when you should avoid one, pros and cons and alternatives to CPO vehicles.
A CPO vehicle is a type of used car with the original automakerâ€™s seal of approval.
To be a CPO vehicle, a car should:
Buying a CPO makes sense if you want extra peace of mind when buying a used vehicle. It may especially be worth it if:
Certified pre-owned versus used.Â Because CPO cars are considered less risky, lenders usually give lower auto loan APRs for CPO vehicles versus used vehicles. The difference may or may not be enough to make a large difference in the bottom line of what you pay in interest, but itâ€™s probably worth asking a loan officer when you begin shopping around for auto loan rates.
How to shop for an auto loan. Donâ€™t simply get a loan through a dealership as dealers regularly increase APRs. You should shop around for the best auto loan rates. Potential lenders could include your credit union, bank or online lender. Donâ€™t make one of the common mistakes people make when they need a car loan and do check out our auto loan marketplace when youâ€™re ready to see potential rates.
Where can you get a CPO car? From a car dealership (not a car lot) of the brand youâ€™re seeking. For example, you could get a CPO Toyota from a Toyota dealership; a CPO Ford from a Ford dealership. You canâ€™t get a CPO Toyota from a Ford dealership.
Despite all the benefits of a CPO vehicle, the price is almost always higher than a regular used car, perhaps thousands of dollars higher.
A CPO car may not be worth it if:
If a CPO doesnâ€™t seem worth the extra cost, there are other ways to buy a new-to-you set of wheels:
Buy a used car. A regular used car can be just as good as a CPO car and has a lower price tag. If you are concerned about the quality of a used car that hasnâ€™t been certified, you could have it inspected by an independent mechanic, most likely for a fee. We tell you what to look for when buying a used car.
Buy your own extended warranty. Plenty of third-party companies offer extended warranties for almost any type of vehicle. But make sure you understand what youâ€™re paying for: Extended warranties typically begin after the manufacturerâ€™s warranty ends but refer to the entire length of time the car is covered.
For example, if you buy an extended car warranty of six years, 72,000 miles on a Toyota, the car would be covered for a total of six years or 72,000 miles, not an additional six years and 72,000 on top of Toyotaâ€™s usual 36-month, 36,000 mile warranty.
There are several companies that sell auto extended warranties and you could get a few different quotes to determine whatâ€™s best for you and your car.
Buy new instead. If you are that worried about potential repairs you may have on a used car, consider a new car. Yes, new cars are typically more expensive than used, but you could wait and watch for sales and rebates, consider less expensive models or look at different trim options of a model you like. A lower trim level could mean getting cloth seating instead of leather, but you would still have that model of car.
Lease a new car. New car leasing almost always has lower payments than new car financing. And, of course, a new car is covered by a new car warranty. You can check here for more on leasing.
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