Precaution to take before purchasing used cars in US
There’s a relatively new type of used car on the market that offers the advantages of buying both new and used. That is, you get more for every dollar spent, as well as the solace of knowing that the vehicle’s health and well-being is guaranteed by the vehicle’s manufacturer or an independent agency. It goes by many names, but is most commonly known as certified pre-owned (CPO).
To qualify as CPO, a vehicle must be inspected, refurbished to “almost new” condition and certified as such by the vehicle’s manufacturer or an independent certifying authority. This helps to almost eliminate the chance of a consumer getting a lemon. Furthermore, CPOs typically come with some type of factory-backed warranty and financing, just like a new car.
There are variations regarding what is termed certified pre-owned, however, so it’s important to note the distinctions. Manufacturer (or “factory”) CPO vehicles are sold only at authorized dealers. The cars are generally five years old or newer and have fewer than 80,000 miles, and they often cost more than vehicles certified by independent authorities. Independently certified CPOs can represent good value, especially since independent authorities may hold a vehicle to a higher standard than a manufacturer. Independents include brands such as the National Vehicle Certification Program, CarMark and others. Finally, there are dealer-certified vehicles. These generally have not been inspected by anyone outside the dealership, but do typically carry a warranty or extended service contract to provide some protection to the consumer.
While we aren’t fans of the dealer-CPO vehicle programs, we do think the others, in general, take much of the worry out of buying used, and the value proposition of CPO cars has garnered consumer interest in this tough economy.
“Across almost every major [manufacturer], new car behaviors have trended downward, used has gone downward and, for the most part, CPO has trended up,” says Steve Gallagher, marketing manager for Toyota’s CPO program. Gallagher also notes that May was Toyota’s best-ever CPO sales month and that the company is on track for its best CPO year ever.
Be careful, though. CPO certification adds, on average, $1,300 to the price of a used car, and it can go as high as $2,000. In today’s strong used-car market, that can bring the price of a CPO car close to the price of a new car, and that’s before manufacturer incentives. Many manufacturers offer more favorable financing rates, though, so buyers can save money that way.
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