Certified Pre-Owned Vehicles—Smart Choices for Smart Shoppers

Depreciation. It happens the moment you drive a new cars off the dealer’s lot. In most cases, your new car loses about 11 percent of its value once it leaves the dealership. (Some models can lose as much as 20 percent.) It’s because of this harsh reality that from a purely financial sense it makes more sense to purchase a used vehicle over its brand-new counterpart.

But buying a used car comes with risks. Obviously the mileage will be higher than a new car, but it’s the harder-to-see factors that are really concerning. How was the car driven? What kind of shape are the mechanical components in? Am I looking at expensive repairs? These are the questions that haunt used car buyers.

How do you banish these ghosts of the used car purchase? By turning to a certified pre-owned (CPO) vehicle. CPO vehicles offer many advantages over a standard used car—they can even trump a new car purchase, thus making them one of the smartest buys on the lot. CPO vehicles offer a host of benefits:

• They’re Less Expensive Than New Vehicles – Because CPO vehicles aren’t new, they don’t demand the same price as a new car (and they don’t suffer from instant depreciation like a new car). Granted, they’re more expensive than a standard used car, but a CPO vehicle will deliver a like-new experience at a less-than-new price.

• They’re Less Risky Than Standard Used Cars – CPO vehicles are subjected to rigorous manufacturer-mandated inspections, and only those vehicles that pass earn the coveted CPO designation. For example, to be included in Ford's CPO program, a car has to pass a 172-point inspection. That means 172 different aspects of the vehicle are evaluated, from the body panels to the upholstery to the engine itself. And because the vehicle has been so thoroughly inspected, you’ll know you’re not purchasing a pile of problems created by the previous owner.

• They Have Strong Warranties – Because CPO vehicles have been so thoroughly inspected, the manufacturer backs them with strong warranties that standard used cars don’t have (unless you purchase expensive third-party warranties). For example, Hyundai CPO vehicles honor the remainder of the 10-year/100,000-mile powertrain warranty that comes with new Hyundai vehicles. This means that if you purchase a two-year-old CPO Hyundai with 40,000 miles on the odometer, you'll enjoy warranty coverage for 60,000 miles or eight years—whichever comes first.

• They Qualify for Lower Finance Rates – Unlike new cars that often are offered with very low (or in some cases, zero) percent financing rates, financing for standard cars is offered at higher interest rates. CPO vehicles, however, are often available at similar financing rates as new cars. Shop around, and you’ll likely score a great financing deal.

• They’re Less Expensive to Insure Than a New Vehicle – Because a car's insurance rate is often linked to its value, it's more expensive to insure a new car than it is to insure one that is used. For this reason, CPO cars are a great choice if you want to save money each month in insurance premiums.

So if you’ve been considering a new car purchase, you owe it to yourself and your bank account to explore the benefits offered by certified pre-owned vehicle. You’ll gain many of the benefits of a new car without burdening yourself with the instant new-car depreciation or the maintenance risks of standard used car.