Certified Pre-Owned Cars vs New Models: How to Decide

by Dave Pankew

Car companies promote certified pre-owned cars as having the same benefits as new ones, but at a cheaper cost. If only it was that simple to compare new cars and CPO cars!

Let's look at the pros and cons of buying a new car from a dealership. We can also look at the pros and cons of buying a certified pre-owned car. Comparing these options can help us make a better choice for your next vehicle.

Certified Pre-Owned Cars vs New Models: How to Decide

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Is A New Car Purchase the Right Move?

New cars have more than just that signature new-car smell. They have no secrets or stories to tell, either. They’ve gone from the factory to the dealership, and now they’re waiting for you. Here are some of their main benefits.

  • New cars have the best financing rates. New cars often come with special financing or rebates from the manufacturer. Consider buying new with a special financing rate. This might be a better deal than buying a certified pre-owned model, especially if the car holds its value well.

  • You’ll get a full new car warranty. Brand-new cars offer the best bumper-to-bumper warranties, period.

New cars usually have a warranty for three years or 36,000 miles. Some cars have a warranty coverage for up to five years or 60,000 miles. And new-car warranties don’t have deductibles like the added warranty you might purchase on a used car, helping reduce repair costs.

  • The latest features, design, and tech. Automakers rarely take a step backward when rolling out their latest models. If you are an early adopter, a used car is unlikely to meet your expectations.

  • You can get what you want. When buying a new car, you can usually choose the features you want from the options provided by the automaker.

If you desire to buy a car with red paint, a sunroof and leather seats, you can get one — though you may have to order it. You cannot be as selective with a used car.

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Is a Certified Pre-Owned Car Purchase the Right Move?

Consider buying a certified pre-owned car to save money and avoid a quick drop in value. A certified pre-owned car is a good idea to buy a brand-new one with all the latest features.

Certified pre-owned vehicles are usually only a few years old, and they have passed the automaker’s CPO test. Typically, the condition and quality of these cars is a step above a traditional used vehicle, offering perks such as recent model years, low mileage, and for many, peace of mind. CPO vehicles are often the best cars in the sea of regular used cars. Often, CPOs are trade-in vehicles originally sold as new cars from the same dealership.

Originally designed for luxury manufacturers, the concept was introduced as a way for luxury car manufacturers to provide a reliable and cost-effective alternative to buying a new car. Over time, the entire automotive industry adopted the concept of CPO programs.

Here’s why you might want a CPO car:

  • Someone else took the initial loss in value. All cars are hit with depreciation the minute they roll off of the dealership’s lot for the first time. Buying a used car with a CPO warranty will usually be significantly cheaper than buying a new one, making accessibility of luxury or upmarket cars possible for people who may not otherwise be able to afford it. Think about it like getting an Audi for Toyota money.

  • They inspected them. Every car brand’s certified pre-owned program requires completing a checklist before certifying a car. A trained technician checks a long list of over 160 points for Lexus, for example.

The careful inspection of a certified pre-owned car is a significant advantage. This multi-point inspection, usually covering over 100 points, makes sure the car meets high standards of quality and performance. Skilled technicians carefully inspect all parts of the car, including the engine, transmission, electrical systems, and interior features. This careful process finds problems and helps the buyer know the car's condition well, ensuring the car has a high level of dependability.

Having a detailed inspection report offers several benefits when car buying. First, it provides transparency, allowing you to make an informed decision based on the car’s actual state rather than just its appearance or sales pitch - and giving you items to look out for during a test drive. Second, it highlights any repairs or replacements that have been made, giving you confidence in the vehicle's reliability. Third, the inspection report can serve as a valuable negotiating tool, as it provides documented proof of the car’s condition and any work that has been done.

As part of the inspection, the dealer may provide a CarFax or similar vehicle history report. In the absence of speaking to the previous owner, this is the best way to get an idea of the car’s history.

  • CPO cars repair or replace worn parts. If something fails in this thorough inspection, the dealer must fix it before certifying the car. This often includes wear-and-tear items like brake pads, tires, and windshield wipers. All this can add to considerable cost savings for you if you’re looking at a non-CPO used car, even if the work is done at an independent mechanic, offsetting the lower price of a non-CPO car.

  • They have an extended warranty. CPO warranties vary by automaker and differ from the original manufacturer's warranty.

Many certified pre-owned cars come with a year or more of basic coverage that extends the factory warranty. Luxury CPO cars may even offer unlimited-mile powertrain warranties after the original warranty expires. Some warranties only cover the engine and transmission, while others limit what parts they cover even more. Having a warranty backed by the manufacturer is better than having no warranty at all.

Most CPO programs also offer roadside assistance, although the benefits will vary between brands. You won’t get that with a non-certified used car unless it still has some of its factory bumper-to-bumper warranty in effect.

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CPO vs. New Car: Is It Worth It?

Ultimately, this becomes a numbers game. You know that a new vehicle will probably cost more than an identical CPO car.

When you choose a CPO model, you may get more value for your money. However, the financing rate may not be as competitive. Be careful when buying a CPO car with a high residual value. Special interest-free promotions may cancel out any savings from a 7% interest rate.

Understanding the cost of an auto loan can help you make the best choice. This is crucial to keep your monthly payments low and getting yourself the best price. It can be a little tricky to factor in potential expenses once the warranty expires, though, so keep this in mind.

Also, few manufacturers offer CPO lease programs. Shoppers who like the idea of a lease will likely want to look at a new car instead.

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Dave has been a gearhead forever and bought his first car at only 15. Since then he has owned, built, and raced over 60 cars. He turned his obsession into a career as an automotive journalist and contributor to such publications as Motor1, Car Buzz, and Street Muscle Magazine.

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