If you’re ready to buy a car but would like to save money by buying one with a few miles on it, there’s a way to combine used car savings with new car peace of mind: the CPO, or certified preowned car. CPOs are essentially used cars, but they carry many of the benefits of new cars – most notably the warranty – and are certified by the dealership as being mechanically sound and ready for service.
CPOs are attractive for different reasons, depending upon who you are. Dealerships like them because they command higher prices than run-of-the-mill used cars. They’re always on the lookout for low mileage cars in good condition that they can sell through their CPO programs. Consumers like CPOs because the sting of brand-new car depreciation can be avoided, as well as mechanical problems of the sort sometimes seen on older or more heavily used vehicles. Because of their unique “just right” classification, CPOs are priced differently than both new and used vehicles. If you take a look at Kelley Blue Book’s valuation tool, you’ll notice that there’s a separate category for them.
December, with its myriad end-of-year sales and incentives, is a good time to be on the hunt for a CPO car. Here are a few things to keep in mind during your search:
1. CPOs eliminate much of the used car buying hassle: Most dealerships have CPO programs now because there’s a sizable market for people wanting to pay a little more for a more consistent, reliable used car buying experience. CPO cars are inspected by the dealership service department and are guaranteed to be free of mechanical defects.
2. Pick a model that suits you: Above all, know what you want and have a backup model or two in mind. Then you can check dealership inventories online to see what’s available through their CPO programs. You may have to look farther afield than your own backyard, though. CPO cars have gained in popularity over the past decade, but compared with new and used car sales, they’re a relatively small slice of the pie.
3. Have your finances in order: Just like you would when buying a new car, have your credit checked and get preapproved for financing before you show up at the dealership. This will give you more negotiating power when it comes time to hammer out the payment plan details. Maybe the dealership has a better deal than your credit union, maybe not, but a preapproval will make it more likely that the dealer will give you better terms than they would otherwise.
4. Test drive and inspect the car you want to buy: Unlike brand new cars, which are all pretty much the same across each model line, used cars – even CPOs – bear the varied scars of continuous use. Seats and carpets car be stained, burned or torn, paint can be scratched, and parts can rattle out on the road. Make sure you take the car you want to buy for a thorough test drive. As you would with any used car, visually inspect it in a well-lit area. Take a look at the undercarriage to check for rust and the deep scrapes and gouges indicative of hard driving. If it doesn’t look kosher, be ready to look at another vehicle.
5. Be ready to walk: If anything about the negotiations doesn’t sit right with you, pull the plug. A salesperson can apply all the pressure he wants, but you’re not obligated to buy anything until you fork over your money and sign a contract.
6. Insist on seeing a vehicle history report: These are usually included with CPO cars, but make sure you don’t overlook this important detail. This report will tell you if the car has ever been in an accident or flood, or whether it has any type of salvage designation. While it’s unlikely a flood car would make it onto a CPO lot, it doesn’t hurt to make sure before you buy.
7. Check pricing before you go: Consult Kelley Blue Book’s CPO pricing guide before you show up at the dealership. That way, you’ll know if the dealer is charging an above-market price for the car you want.
8. Find other dealerships with similar CPO cars: If the car you’re looking at is a popular model, it’s likely to be sold through CPO programs at dealerships other than the one in your neighborhood. Arrive at your local dealership armed with this information and be ready to pit various dealers against one another in an effort to secure the lowest price. It’s the same thing you would do when buying a new car.
9. Look at the warranty fine print: The car may still have some manufacturer warranty left on it, but if any extra warranty has been added, be clear on how much it costs and when it starts and ends. Some warranties began when the original owner bought the car, and some start with the CPO purchase. If you play your cards right, you could enjoy years of warranty protection.
10. Be wary of extended warranties: Dealership sales staff will most likely try to sell you an extended warranty – paint and fabric protection in particular. Whether or not you buy all depends upon how long you plan on keeping the car. If you’re going to hold on to it for a while and want to protect yourself from the potential of expensive repairs, maybe you’ll decide to spring for an extended warranty. But be aware that most CPO programs already preserve or extend the manufacturer warranty, so an extended warranty may be superfluous.
This story originally ran on KBB.com.