Weighing the Pros and Cons of Buying a Certified Pre Owned Car

Certified pre-owned (CPO) cars are gaining popularity in the used vehicle market, offering reliability and trustworthiness. Understanding the benefits and drawbacks of buying a CPO car is crucial. This article provides detailed information about these vehicles, highlighting their advantages, disadvantages, and factors to consider when purchasing a used car.

Certified Pre-Owned Cars: A Growing Trend in the Used Vehicle Market

Certified pre-owned (CPO) vehicles are sold by specialized dealerships that follow strict quality standards to pick their cars and prepare them for sale. These companies can be authorized dealerships affiliated with vehicle manufacturers, third-party large retail stores, and used vehicle seller networks.

Dealerships selling these cars have specific standards and requirements that start in the purchasing process. They thoroughly inspect the vehicles in different stages and have programs that cover mechanical and aesthetical aspects to ensure they can sell warranted used vehicles. These companies aim to sell reliable, problem-free used cars, offering their customers complete satisfaction.

This is a global trend; the offer of certified pre-owned (CPO) vehicles’ popularity is increasing worldwide, and Singapore is no exception. These can be attributed to several factors; in the first place, these cars provide a middle ground between buying new and used. They assure a thoroughly inspected and reconditioned vehicle with added benefits such as extended warranties and roadside assistance while are still more affordable than brand-new cars. This is attractive to a niche of buyers who value peace of mind and promised quality and don’t mind the higher price tag or people who had a bad experience with used cars in the past. Besides, as more and more dealerships offer CPO programs, buyers have a wider selection, making them even more attractive to potential buyers.

In this article, you will find more about these cars, the differences between them and regular used cars, their pros and cons, and all you need to make an informed decision when buying your next used car.

Understanding Certified Pre-Owned Cars

We have already introduced the CPO concept; now it’s time to explore it further.

Certified Pre-Owned Car Explained

Certified pre-owned cars go through several stages before they are made available for sale. Although the process and requirements may vary depending on the company or dealer, the steps are usually the same. For instance:

Buying The Car

The process begins with acquiring the car. It involves a rigorous vetting process, as fully reconditioning a vehicle to look and perform almost like new may not always be possible or financially viable for the dealership. Here, the practices of brand-affiliated dealerships may differ slightly from those of independent CPO dealerships.

Brand-affiliated dealerships often work with customers looking to purchase a new vehicle, while independent dealerships source them from individuals who may not necessarily buy another car from them. Consequently, brand-affiliated dealerships may have more flexible policies, as buying vehicles from their customers serves marketing purposes and ensures a sale, allowing them to handle any potential issues more effectively. It’s a win-win for them, as they will gain from the sale of both sales at the end of the day, which provides them with a wider margin of operation.

The criteria most companies, whether official or independent, have for purchasing vehicles include the following:

• Candidate vehicles must be below a certain age, typically 10 years or younger, with an average maximum age of around 7 years.
• Companies won’t buy vehicles with more than 60,000/50,000 miles or 100,000 km.
• Some companies won’t either buy certain models that are unpopular, have known reliability issues, or belong to older generations.

While these factors don’t guarantee a car is in perfect condition, they help companies narrow their search. Besides, it allows them to set clear rules and requirements for buyers and sellers.

Certified pre-owned (CPO) dealerships also ensure that all necessary documentation, such as vehicle registration and ownership papers, is in order. Besides, they conduct thorough background checks to ensure the vehicle is not stolen and has a clean title. These measures provide buyers with peace of mind and assurance that they purchase a safe and legitimate vehicle.

Brand-affiliated dealerships may have stricter criteria regarding maintenance records. They may require documented proof that all service and maintenance were performed by authorized shops using original parts. Independent dealerships usually have less-strict policies in this regard. However, independent dealerships tend to pay higher prices for vehicles with impeccable maintenance records, which can increase the unit’s resale value.

Owners of vehicles that meet the initial requirements set by the dealership can schedule a pre-purchase inspection. This inspection assesses the vehicle’s overall condition, verifies its eligibility for the CPO program, and determines its value. If the car passes the inspection, the dealership will make an offer to the owner based on factors such as the vehicle’s market price, condition, and mileage. If the offer is accepted, the purchased vehicle will proceed to the next stage, as we will explore next.

Reconditioning The Car

After acquiring the car, these dealerships usually follow a structured reconditioning process to enhance the vehicle’s appeal and value for potential customers. These dealerships often operate in well-equipped facilities resembling small production factories, allowing them to work on multiple vehicles simultaneously to optimize efficiency. Besides, they usually establish partnerships with parts suppliers, enabling them to benefit from competitive pricing for regular and bulk orders. Such dealerships also strategically purchase commonly used items like motor oil, coolants, and parts, ensuring ready availability and cost-effectiveness for their operations. Brand-affiliated dealerships benefit from the additional advantage of sourcing their parts straight from the manufacturers.

Some of the most important steps in this stage are:

• Mechanical inspection and repairs: Vehicles are re-inspected in-house more exhaustively. Some companies claim they check over 300 key elements, including engine, transmission, brakes, suspension, electrical and electronic components. If a vehicle presents a severe flaw, it may be discarded to be sold as a CPO vehicle and sold through another channel. Vehicles that don’t show significant problems are repaired and restored using genuine or premium aftermarket parts, depending on the dealership.
• Maintenance and Reconditioning: Some companies replace worn tires, brake pads, and other components, while others only replace the necessary parts to make the vehicles sellable. Most companies replace the oil, filters, coolant, timing belt, or chain tensors if required.
• Thorough Cleaning and Detailing: The vehicle undergoes an extensive cleaning process that includes upholstery and trim in the interior and professional detailing to its body to make it look and feel as good as new.
• Road Test: The vehicle is taken for a test drive to evaluate its handling, steering, braking, and overall performance.

Once these steps have been followed successfully, the vehicle is ready for sale.

Certified Pre-Owned (CPO) Cars Extra Benefits

CPO vehicles come with different levels of warranty, depending on the dealership. Some companies offer a 3-month warranty with unlimited mileage with the option to extend it for 12 months or 50,000 kilometers. Others allow users to choose the type of warranty, for example, between a high-mileage limited engine and transmission warranty or a shorter bumper-to-bumper warranty. Some companies even offer customer satisfaction or money back warranty where they can use the car for a week or between 300 and 500 kilometers and return it if they don’t like recovering their money or changing it for another unit.

Besides warranties, most companies offer extended warranties at an additional cost, and most offer road assistance. As the benefits offered by each dealership are different, it’s essential to compare and evaluate before buying one of these vehicles.

Differences Between Certified Pre-Owned Cars and Regular Used Cars

Now that we have provided a detailed explanation of certified pre-owned (CPO) cars let’s examine the key differences between CPO cars and regular used cars.

• Inspection and Certification: CPO cars generally undergo a rigorous inspection process that may be more exhaustive than what an individual buyer would typically perform on a regular used car.
• Reconditioning and Repairs: CPO cars are supposed to be perfectly reconditioned and repaired to address any issues found during the inspection. On the other hand, regular cars may not receive the same level of reconditioning.
• Warranty Coverage: CPO cars come with a warranty, with the option of paying for an extended warranty, providing additional peace of mind to the buyer. Regular used cars may have a limited or no warranty, making it almost impossible or extremely costly to claim for hidden faults that may appear after the purchase.
• Additional Benefits: CPO cars may offer additional benefits like roadside assistance, financing options, and other advantages that are impossible to get when buying regular used cars.
• Higher Price: CPO cars tend to have a higher price than similar vehicles due to their allegedly better condition and warranty coverage.

Certified Pre-Owned Cars Pros and Cons

CPOs Advantages:

• Quality Assurance: These vehicles undergo a rigorous inspection process to ensure they meet specific quality standards and are reconditioned and repaired to ensure optimal working conditions.
• Warranty: CPO cars come with different types of warranties that cover any potential issues that can appear in a given time frame.
• Financing Access: Dealerships working with these cars usually offer financing options similar to the ones provided when buying new vehicles, making them more accessible.
• Vehicle History and Documentation: CPO cars have detailed vehicle history reports, providing transparency about past ownership, maintenance records, and potential accidents or damages.
• Peace of Mind: Purchasing a CPO car provides peace of mind knowing that the vehicle has undergone a thorough inspection and meets specific quality standards.

CPOs Disadvantages:

• Higher Price: CPO cars come with a higher price tag than the market price of similar vehicles due to the added benefits, warranty coverage, and inspection processes associated with the certification.
• Limited Selection: The offer of CPO cars is limited regarding available makes, models, mileage, and specific vehicle preferences when choosing from the CPO market.
  Varied Certification Standards: The certification process and standards may vary between dealerships and manufacturers. There may be inconsistency in the thoroughness and rigor of the inspection and reconditioning procedures, leading to variations in the quality and reliability of CPO cars.
• Overvaluation: The higher price of CPO cars does not always represent the vehicle’s actual value. CPO vehicles’ price is increased based on the certification status and additional benefits, which may not necessarily represent the unit’s true value.
• Depreciation: The initial higher price of a CPO may drop with use and time, as the vehicle’s certification is established at the time of the purchase. Once the warranty is over, recovering the extra money spent on the vehicle is not always easy.

New Cars vs. Certified Pre-Owned: Head-to-Head Comparison

Depending on the make, model, and trim, choosing between a brand-new or a certified pre-owned vehicle can be tricky. Let’s make a head-to-head comparison to evaluate the pros and cons of both options.

New Cars

Pros:

• Fresh Start: For many buyers, the feeling of being the first owner and experiencing the brand-new smell, new interior, and being the first owner of a car is a unique experience that provides excitement and satisfaction.
• No Worries: Brand-new vehicles are free from wear and tear, previous ownership, or undisclosed incidents. You and only you are responsible for the vehicle’s condition with no potential hidden issues.
• Latest Features: New cars usually offer the latest technology, safety features, and design innovations compared with older vehicles of the same model.
• Customization Options: Some models and trim levels allow users to choose specific colors, upholstery, and optional features.
• Wider Selection: There are no limits when it comes to buying a new car. The only limits are your budget and personal preferences.
• Direct Factory Warranty: New cars’ warranty is covered by the dealership that is backed up by the vehicle’s factory.

Cons:

• Higher Purchase Price: New cars have a higher price tag than used vehicles of the same make and model.
• Higher Depreciation: New cars experience rapid depreciation in the early years, resulting in a significant loss in value.
• Increased Insurance Costs: Insuring a new car can be more expensive due to its higher value.
• Higher Registration Fees: As new cars are more pricey than used vehicles, registration fees and other expenses are usually higher than the ones applied to used vehicles.

Certified Pre-Owned (CPO) Cars:

Pros:

• Lower Price: CPO cars are more affordable than new cars of the same make and model.
• Well-Maintained Vehicles: CPO cars are in great operating condition and have a documented service history.
• Extended Warranty: These cars often come with extended warranty coverage. Cars sold by brands’ authorized dealerships may offer warranties similar to the ones offered for new vehicles.

Cons:

• Tear and Wear: Even when certified pre owned vehicles have undergone thorough inspection and maintenance, they already have run for several miles and may have a shorter lifespan than brand-new cars.
• Still Used Cars: No matter how well they have been reconditioned, they are still used cars. Many people don’t care about it, but it’s important to remember that CPOs are marketed as “as good as new” vehicles, but they aren’t brand-new.
• Narrower Selection: The offer of CPO cars is limited to what dealers have in stock at that moment, so their offer is narrower compared to the wide variety of new cars.
• Variable Certification Standards: The certification process and standards may vary between dealerships, leading to inconsistencies in the thoroughness and rigor of inspections.

Factors to Consider When Buying a CPO Car in Singapore

If you choose to buy a CPO car in Singapore, you should consider these key factors before making a decision:

• Dealership’s Reputation: Do proper research and choose a reputable dealership that conducts responsible and thorough car selection and conditioning, providing high certification standards.
• Price Comparison: Compare the price of the CPO with similar models in the market to ensure it offers value for money, considering its condition, warranty, and other benefits.
• Maintenance Records: Search for a vehicle with detailed maintenance records to ensure that the car has been well-maintained and serviced regularly.
• Mileage and Age: Consider the mileage and age of the CPO car, as they can impact its reliability, future maintenance costs, and resale value.
• Test Drive and Inspection: Inspect the car thoroughly as if you were checking a standard used car. It’s advised to hire a trusted mechanic to conduct a professional inspection to identify any potential issues. Finally, test the unit when possible.
• Warranty Coverage: Review the warranty offered with the CPO car, including its duration, coverage, and any additional extended warranty options.
• Return and Exchange Policy: Understand the dealership’s return and exchange policy, if any, to have recourse in case of unforeseen issues or dissatisfaction with the purchased CPO car.
• Additional Benefits: Consider any additional benefits offered by the dealership, such as roadside assistance, complimentary servicing, or other exclusive advantages.
• Financing Options: Explore the financing options available for purchasing a CPO car, including interest rates, loan terms, and eligibility criteria.

Certified Pre-Owned Cars: Final Analysis Towards an Informed Decision

Now that we have discussed CPOs, their pros and cons, and compared them with regular used cars and brand-new cars, you have all the insights into the factors to consider to make an informed purchasing decision. CPOs’ growing popularity in the used vehicle market provides customers extra peace of mind, financing choices for used vehicles, warranties, and other benefits. However, there are still a few things to consider, so stay tuned as we approach the finish line of this article.

Are Certified Pre-Owned Cars Worth It?

As the popularity of certified pre-owned (CPO) cars continues to grow, many car buyers are considering whether they are worth the investment. CPO cars offer the appeal of used vehicles and the added benefits of certification, warranty coverage, and lower prices than new vehicles. They provide buyers with the peace of mind of making a reliable choice and minimize the risk of purchasing a used car from an unknown source or small dealership.

The value of a CPO car ultimately depends on the thoroughness of the inspection and reconditioning processes conducted by the dealership and the reliability of the warranties provided. Ideally, CPO cars are well-maintained vehicles with lower mileage and complete maintenance records, ensuring their condition and performance. If these criteria are met, the additional cost of CPO cars is highly justified.

However, for seasoned car enthusiasts or budget-conscious buyers, excellent deals can still be found in the traditional used car market. It all comes down to individual preferences, budget, and confidence in making a wise car purchase. While buying a CPO car minimizes the risk of making a wrong choice, it is essential to remember that certain risks still exist when purchasing any used car, unlike buying a brand-new vehicle.

Thorough research and careful consideration are essential when making this decision to ensure a satisfying and successful car-buying experience.

Exploring Case Scenarios: When to Consider a Certified Pre-Owned Car

When considering a certified pre-owned (CPO) car, it’s essential to find a reputable dealership with a comprehensive CPO program and warranty. Some dealerships offer exceptional coverage and even exchange options if issues arise during the warranty period. CPOs also provide the opportunity to find higher trim levels and optional features at a similar or lower price compared to new vehicles of lower models

For instance, let’s compare a brand-new 2022 Honda Civic LX with a certified pre-owned 2019 Honda Accord EX. While the Civic has a slightly lower price and the latest features, the CPO Accord offers a higher-end trim level with additional features like leather upholstery and a power moonroof. Moreover, the Accord holds a higher ranking in the midsize car category compared to the Civic in the compact car segment. With the certified used Accord, you’ll benefit from a one-year/12,000-mile warranty, a seven-year/100,000-mile powertrain warranty, roadside assistance, and the option to access new car financing rates. This is a compelling case where buying a CPO becomes an intriguing option.

By carefully assessing the trade-offs between a new car and a CPO vehicle, you can make an informed decision based on your priorities and preferences. Thoroughly researching the dealership’s reputation and warranty coverage and comparing specific models will help you determine whether a certified pre-owned car is the right choice.

Let’s compare two options: a brand-new 2022 Honda Civic LX priced at $22,000 and a certified pre-owned 2019 Honda Accord EX priced at $23,500. While the Civic offers a lower price tag and the latest safety features, the CPO Accord provides a higher-end trim level with additional features like leather upholstery and a power moonroof. The Accord also boasts a higher ranking in our midsize car category compared to the Civic’s ranking in the compact car segment. With the certified used Accord, you benefit from a one-year/12,000-mile warranty, a seven-year/100,000-mile powertrain warranty, roadside assistance, and the option to access new car financing rates. By carefully weighing the trade-offs between a new car and a CPO vehicle, you can make an informed decision based on your priorities and preferences.

Final Words

Before making a final decision, take the time to research and consider all the factors at play thoroughly. Consider each option’s details, set a budget, and choose one or a couple of vehicles that suit your needs. Then explore different dealerships, compare prices, warranties, inspect the vehicle’s condition, and assess your personal needs and preferences. This is not a decision to be taken lightly, as it can have long-lasting implications. So, arm yourself with knowledge and take your time before reaching any conclusion. Remember, a well-informed decision is a confident decision. Happy car hunting!