As new vehicle prices climb higher each year, increasing numbers of buyers are turning to certified pre-owned (CPO) used cars as an affordable alternative. Considering CPO vehicles give you that almost-new feeling and a decent warranty for a lower price tag, they seem like a compelling compromise.
Buying a CPO vehicle won’t get you a new car’s latest tech. It might also not be the best option if you don’t keep cars for long or you’re nervous about expensive repairs. A little bit of research will help you make the right decision.
Determine Your Budget
Almost always, a certified pre-owned car will cost more than a similar used, non-CPO model. But the certified model’s price tag will still likely be less than that of a new model. And there’s more to owning a car than its initial price tag: Insurance payments, vehicle fees, and taxes should all be lower for certified pre-owned used cars.
It’s tough to match the financing rates automakers offer for new cars, but CPO cars do often come with competitive financing. And some CPO programs sweeten the deal by including free maintenance, roadside assistance, loaners when your car needs a repair, and satisfaction guarantees that let you swap a vehicle that doesn’t meet your expectations.
The numbers point to a CPO car being a prudent financial choice in the long run.
If you’re on a budget, buying a CPO car is a great way to keep costs down.
Decide How Much Risk You’re Willing to Take
Warranties are an essential part of certified pre-owned used cars. Most CPO warranties include the remainder of the new car warranty and additional warranty protection.
However, this additional protection is rarely as comprehensive as the new-car warranty. And since CPO vehicles are typically a few years old, their total warranties typically cover less time than a new-car warranty would.
You might have heard about extended warranties. Don’t confuse them with certified pre-owned warranties. Extended warranties add to the cost of your purchase, and some consumer advice experts don’t consider them a good investment.
If you’re risk-averse, you'll get the best protection by buying a new car.
Consider How Important New Features and Tech Are to You
You’ll have to choose between getting the latest features in a new car and the benefits of a certified pre-owned car; you can’t have it both ways. While you can select specific options to include on a new vehicle, the sad truth about used cars is that you’re limited by supply. If a safety or tech feature you want isn’t available on a used car, you can’t ask a factory to produce one with it. Yes, you can add features and tech by purchasing aftermarket products, but that adds to your bottom line.
If you like having the latest and greatest features, a new car is the way to go.
Know How Long You Plan to Keep the Car
Do you keep your cars for three years or less? If so, a new car is the best choice. You'll have less to worry about because your car will be covered bumper to bumper and you'll get the latest gadgets and safety features.
But in this instance, you don’t want to buy a new car. Your car’s value drops significantly during the first couple of years of ownership. Instead, a lease makes the most sense if you like rotating your daily driver frequently.
But with a few exceptions, certified pre-owned vehicles aren’t typically available to lease. In this case—and if you would rather own your car than lease it—a CPO model hits the sweet spot. It’s less expensive and depreciates a lot less than a new vehicle.
Do you plan to keep your car five, six, seven years or more? This is when depreciation becomes a less important factor and buying new makes the most sense. When it comes time to move on, you likely won’t get a significant percentage of your original purchase price back from the sale, but you will likely find a buyer, and you will have gotten a lot of use out of the vehicle.
Buying a CPO car or leasing a new one makes sense for short-term ownership. New cars are best for shoppers who plan to keep their vehicle a long time.
The Bottom Line
Certified pre-owned cars deliver exceptional value. Their prices are lower than those of new cars. Their warranties are also good.
New cars are less likely to break down. If they do, a lot more repairs are covered. While new cars do cost more, these vehicles have the latest bells and whistles when it comes to safety and technology.
A lot depends on how long you keep your car. Frequent turnover (say, three years or less) suggests a certified pre-owned vehicle or a new-vehicle lease is your best value. Longer-term ownership reduces the downside of buying new.
Regardless, shopping for a car is always exciting. Just make sure to weigh the pros and cons of certified pre-owned versus new before you head out the door.