What Is a Certified Pre-Owned Vehicle?

What Is a Certified Pre-Owned Vehicle?

Written by Bryan Daly
Fact-checked by Caitlin Wood
Last Updated December 8, 2021

What Is a Certified Pre-Owned Vehicle?

There are a few reasons why someone would choose to buy a certified pre-owned vehicle rather than a regular used car or a brand new one. It could be that they’re looking to sell, trade-in, or scrap their old car. Maybe they’re just in the market for a later model of the same make, or are seeking a nicer, more expensive model for business purposes. Then again, it might be because a brand new car is just too pricey and doesn’t have the right financing or leasing options to suit their needs.

Whatever the reason might be, buying a certified pre-owned vehicle is a great choice for those who want all the benefits of purchasing a used car with as few of the drawbacks as possible. If you’re thinking about acquiring a certified pre-owned vehicle as your first or next car, here’s is everything you need to know.  

Check out how to check the history of a used car 

What is the Difference Between a Used Car and a C.P.O. Car?

First off, it’s best to know how to distinguish between a certified pre-owned vehicle and a traditional used car. True, both types of cars will be pre-owned and can be purchased at second-hand car dealerships. However, where “certified” pre-owned cars differ is that they’ve been certified (guaranteed for stability) by another authority. This means that the car not only has a proper, detailed history but has also been inspected and restored at one of the car company’s manufacturing/retail locations or by another licensed certifier. A regular used car from a private owner or a second-hand dealership might have a history, but will probably not be inspected or refurbished, so the chance of something going wrong with it, should you decide not to get it inspected by a mechanic, is higher. Then, because the car isn’t certified, if the car suddenly breaks down, it’s up to you to deal with the consequences.  

A pre-owned vehicle that is certified will typically be located at a dealership that sells cars of a specific make, such as Toyota, but can also be found at higher-end used car lots. The vehicle will often come from a customer who wants to trade in their car or terminate the lease they had with it. Depending on the manufacturer, a certified pre-owned vehicle will typically be a model that is 5-years old or newer and have 80,000 kilometers or less in mileage. A regular, uncertified car might cost less overall, but can have any amount of mileage on it, with the possibility that the odometer was tampered with and rolled back. A certified car, however, will be guaranteed by the manufacturer, who will also provide an extended warranty, different car financing options and additional perks, such as 24-hour roadside assistance, rental vehicles in the event that you need to bring your car for a repair, etc.  

New vs. Used Cars

Advantages of Purchasing a C.P.O. Vehicle

Another area that a certified pre-owned car will differ from non-certified one is the price. A used car that is certified is generally going to be more expensive, not only because it will be a more recent model with less mileage, but because the dealer needs to factor in the cost inspection and mechanical work. While one should always be wary of buying a used car, a certified vehicle will ensure that it will last you a few years before anything goes wrong and any issues will be paid for by the dealership as specified in the warranty. The option of a certified is also particularly appealing when it comes to a make that tends to have more expensive parts, like a luxury model or European brand, where spare parts are pricier and harder to come by.    

The warranty itself is another major advantage over a regular used car. Similar to what you would have with a new car, an extended warranty, which you can usually lengthen for an extra charge, will guarantee that your car is, at the very least, in working order for the length of that warranty. While a traditional used car, purchased from a private owner or a smaller dealership might be cheaper, there is a greater chance of both problems with the car and failure to deal with those problems on the part of the seller/dealer. Just remember that the terms of the warranty on a pre-owned vehicle will likely differ from those of a brand new car.

A warranty from a manufacturer will also be covered at any official retail location of that company, while a warranty from a specific dealership will likely be restricted to that place alone. In other words, if you purchase a car from a Toyota dealership in Toronto, you should be able to get it repaired at another Toyota dealership in Ottawa. If you buy a car from a private or chain dealership, you must bring the car back to that location if you need something fixed that’s covered by the warranty.

Find out the difference between buying and leasing a car.  

What to Watch Out For When Buying a C.P.O.

It’s important when shopping for a C.P.O. vehicle that you do advanced research to know who exactly it’s been “certified” by. Since the certification process can be done by both a manufacturer and a dealership, different qualities of inspections and preparations will likely be done by both parties. For example, it would be much safer to purchase a vehicle that has been certified by a manufacturer like Toyota, because their standards of inspecting and refurbishing will be higher, with the goal of restoring the car as close to factory-quality as possible. On the other hand, a used car dealership that collaborates with another certification company might only make sure the car is in running condition, using a more basic inspection process.

Before signing any contracts, make sure you read the fine print and remember that not everything will be covered by the warranty. There will be certain mechanical issues that would be covered and some that will not. If a repair is needed that you or someone else was the cause of, like body work after an accident, it will likely not be covered. However, if you’re driving the car prudently and something should just break, it should be dealt with at the dealership with no charge, so make sure to read the terms of the warranty properly.   

Will You Need a Loan to Finance Your C.P.O.?

Since certified pre-owned vehicles tend to be more expensive, chances are that you’ll need to secure a car loan in order to pay for the bulk of it. If that’s the case, there are a few different steps you can take to increase your chances of securing the loan, such as:

Checking Your Credit Score

If you’re considering taking out a loan to finance a car (which is typically the case for most consumers), it’s a good idea to check your credit score before you apply. While not all lenders will use your credit score as a determining factor, having favorable credit will certainly increase your chances. Checking your score will also give yourself an idea of whether you’ll be able to afford not only the initial cost but all the other current and future expenses that come with owning a car in general.

Find out what credit score you need to get a car loan

Paying Off Any Other Debts

Remember, next to buying a house, purchasing a car, even a used one is going to be one of the more expensive transactions you can make in your lifetime. Not only will you be paying for the car itself, you will also rack up expenses further down the line, such as gas and any repairs or issues that aren’t covered by the warranty. Furthermore, once the warranty ends, you’ll have to deal with any repairs out of your own pocket. So, before applying for a loan, it’s best to pay off any debts you might already have, such as a bill from a high-interest rewards credit card. Once your other debts are paid in full, you can re-evaluate your finances, then determine if you can still afford the new loan debt your car might put you in.

Organize All Relevant Documentation, Then Discuss With Your Lender

Another thing you absolutely need to do before applying for a loan is to update and organize any relevant financial/personal documentation. This will make the loan application process run as smoothly as possible. It’s also important to remember that when it comes to any loan, interest fees will apply during the payment period in accordance with how large the loan is. For that reason alone, it’s good to discuss all payment options and terms with your lender before you sign on the dotted line. After all, you might be able to afford the car itself, but not the subsequent loan payments.Auto Financing 101

Get the Car Inspected

Shopping for a used car can be stressful whether you’re looking at certified cars or not. You’ll probably have a lot of people telling you different things, warning you about what could go wrong with certain models or how some sellers are just trying to get rid of a terrible car by dumping it on you. So, when you find a car that you like and that looks to be in good shape, one thing you should do is get it inspected by a certified, trustworthy mechanic. The body and interior of the car might look amazing, but there could be some mechanical problem that you’ll only notice after you’ve bought it.

In fact, even if the vehicle is already certified and inspected by a dealership, getting a second opinion is always a good idea. Once again, some dealerships’ standards for certification might be different than others. It’s rare to find a certified car where the dealer has not included a record of any accidents in the car’s history, but it does happen, especially when the car isn’t coming directly from a reputable manufacturer. So, paying a bit extra to make sure there’s really nothing wrong with the car, mechanically or otherwise, will help you decide if your money will be well spent.

Consider All Factors

There are a lot of things to take into consideration when purchasing a car, new or used, besides the overall price and the future cost of gas. For instance, we live in Canada, land of unpredictable weather conditions. This is one thing that a lot of Canadians fail to take into account when they let the prospect of purchasing the car they desire cloud their judgment. So, rustproofing is another expense to factor in, one that will vary according to the make and model of the car, but one that is a wise investment, especially during the winter months.

No matter what make or model the certified pre-owned car you want to buy is, and no matter where you’re getting it from, remember that a car is a huge expense in many different ways. Seeing that shiny paint job is sometimes enough to make a customer sign a contract without considering everything that can go wrong with any car. So, before jumping to any big decisions, take your time and do a lot of research to find a reliable, certified pre-owned vehicle that’s right for you.

Rating of 5/5 based on 4 votes.

Bryan is a graduate of Dawson College and Concordia University. He has been writing for Loans Canada for five years, covering all things related to personal finance, and aims to pursue the craft of professional writing for many years to come. In his spare time, he maintains a passion for editing, writing screenplays, staying fit, and travelling the world in search of the coolest sights our planet has to offer.

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