DETROIT – A certified pre-owned vehicle costs more than a regular used car, but it can give buyers some peace of mind in an often murky market.
Continue Reading Below
Certified pre-owned vehicles are used cars that are backed by an automaker's guarantee. They're usually newer cars, coming off two- or three-year leases. Certified pre-owned programs limit the miles the cars can have on them — under 60,000, in many cases — and put the cars through a rigorous inspection. They come with extended warranties and, sometimes, extra perks like roadside assistance or a satellite radio subscription.
"If I want a car that hasn't been abused, this is one of the best ways to avoid all that guesswork," says Matt Jones, senior editor of consumer advice for the car shopping site Edmunds.com.
Certified pre-owned programs have been growing in popularity as the supply of used cars balloons in the U.S. New vehicle sales have risen for seven straight years and as many as a third of those vehicles were leased. That has left automakers with a steady stream of two- or three-year-old vehicles with limited mileage that are ideal for certified pre-owned programs.
U.S. certified pre-owned sales grew by 61 percent to 2.6 million between 2010 and 2016, according to Cox Automotive. Still, they only made up a fraction of the 28.7 million used cars sold by franchised and independent dealers last year.
Certified pre-owned status generally adds 6 to 8 percent to the price of the car, or between $1,000 and $1,500, Jones said. A Ford dealer in Michigan is currently advertising a certified pre-owned 2014 Ford Edge SEL with 22,748 miles on it for $21,943. A CarMax dealer in Maryland is offering a non-certified pre-owned 2014 Edge SEL, with 33,000 miles, for $1,044 less. By comparison, a new 2017 Edge SEL starts at $31,790.
Continue Reading Below
For the extra cost, factory-trained mechanics will perform 150-, 160- or even 180-point inspections of the vehicle, which is usually less than five or six years old. Among other things, they'll check for any outstanding recalls and make those repairs.
After that, what you get depends on the brand. Automakers may include whatever is left over from the original powertrain warranty, which covers the engine and transmission, along with a shorter bumper-to-bumper warranty, which covers the engine as well as interior parts like the infotainment system or air conditioning. Roadside assistance is often included for at least some period of time. Some manufacturers charge a $50 to $100 deductible for repairs while the car is under warranty; others don't. Buick offers three months' worth of OnStar and lets buyers return the car within three days if they're not happy.
Dealers pay automakers a fee to certify a used vehicle. Kia, for example, gets $450 for every certified pre-owned vehicle sold, says Maria Williams, a senior certified pre-owned retail support manager with Kia. What's more, she says, Kia is getting a relationship with buyers who will keep coming back to the dealership for service. In 2016, 47 percent of buyers who returned to the car market after owning a certified pre-owned Kia bought a new Kia, she says, based on data from the consulting firm R.L. Polk. That rate dropped to 33 percent among owners of a non-certified pre-owned used Kia.
Here are some things to think about if you're shopping for a certified pre-owned vehicle:
DECIDE IF IT'S WORTH IT: Experts are split on this one. Jones, who owns a certified pre-owned vehicle, says a certified pre-owned vehicle is worth the extra cost because you're getting a higher quality car and the promise of less hassle. Dealers are also more willing to deal on a certified pre-owned car, he says, because they've already paid the automaker to get it certified. But Consumer Reports advises against getting a certified pre-owned vehicle. The magazine says certified pre-owned cars may not be in any better shape than any other low-mileage used car and buyers are better off pocketing the $1,500 or so and saving it for repairs or putting it toward a new car. Consumer Reports says shoppers considering a used car should have it inspected by a trusted independent mechanic before they buy.
MAKE SURE IT'S REALLY CERTIFIED: Certified pre-owned vehicles can only be sold by a brand's franchised dealers. Independent dealers may sometimes call a vehicle "certified" or "Carfax certified," but that doesn't mean it's a manufacturer-backed program with the same quality guarantees as an officially certified vehicle. Check the details of certified pre-owned programs on automakers' web sites or in dealership brochures so you know what you should be getting, and look for the certified pre-owned sticker or logo on the car.
READ THE FINE PRINT: Some certified pre-owned programs are more generous than others. Kia certified pre-owned buyers, for example, get whatever is left of the car's 10-year, 100,000-mile powertrain warranty, plus an additional year or 12,000 miles of bumper-to-bumper coverage. Honda certified pre-owned buyers get a similar deal, but the original warranty is for seven years and 100,000 miles. Lexus offers a two-year full warranty with unlimited mileage, a great perk for drivers who drive a lot of miles. Porsche will certify vehicles that are up to 8 years old, as long as they have low enough mileage. Familiarize yourself with the terms for the brands you're interested in and see what might work best for you.