Is A Certified Pre-Owned Car a Good Deal?
As we look to stretch our dollar further and further, Australians have started holding on to their vehicles significantly longer between upgrades. This is good, from a financial standpoint as it generates less consumer debt, and it has put focus back on the durability of new vehicles. There has also been a growing shift towards the “Certified Pre-Owned” market of used cars. These are used cars that are sold by dealers that work closely with vehicle manufacturers to inspect, repair, and detail vehicles to a like-new condition. But is a certified pre-owned vehicle a good deal for you?
The Best of Both New Car and Used Car Worlds
By purchasing a certified pre-owned vehicle, you’re getting a used car that is generally less than four years old, and meets the original manufacturer’s guidelines for a vehicle of that age. This means that the used car you’re looking at is in nearly new condition, with very little cosmetic damage, and no major mechanical failures looming on the horizon. This provides real peace of mind as you can take advantage of the savings a used car offers without much of the typical risk.
In the first three years of vehicle ownership, a used car experiences over thirty percent depreciation in value. Plus, most of this happens within the first year and a half! That means that simply driving your vehicle off the lot costs you at least a thousand dollars in resale value; that’s an expensive first mile! By purchasing a vehicle after this depreciation has occurred, you get the absolute most car for your money. By combining these savings with the peace of mind that certified pre-owned offers, it truly is the best of both worlds!
What are the Requirements for a Certified-Pre Owned Vehicle?
The vast majority of used cars that fall into the certified pre-owned category are used cars that have recently come into the dealership at the tail end of a lease agreement. This means that the vehicle is only a few years old, and has been maintained according to the terms of the lease agreement. This is good news from a mechanical / wear and tear perspective, as the vehicle has fairly minimal mechanical wear.
After a used car is returned to the dealer, the manufacturer (through the dealer) performs a rigorous inspection of nearly every component inside of the vehicle. This is done in order to confirm that the used car meets the requirements in order to be considered a certified pre-owned vehicle. After any issues with the used car are resolved to the manufacturer’s exacting specifications, the vehicle is then given the designation of “Certified Pre-Owned”.
Are Certified Pre-Owned Vehicles More Expensive?
The short answer is yes. Compared to a similar used car that has not been certified by the manufacturer, a certified pre-owned vehicle will generally cost you an additional $1000. However, certified pre-owned vehicles will oftentimes qualify for generous financing allowances, as well as other promotional rates. You’ll also receive, in most cases, a manufacturer’s warranty on the used car that would otherwise be sold “as-is”.
Prior to the certified pre-owned category being offered, purchasing a used car was really a roll of the dice. You had no way of knowing for sure that planned maintenance was performed on time. In addition, many sellers will place their vehicle on the market immediately before costly maintenance is due. This is one of the many reasons I always recommend having a mechanic you trust take a look at any used car or truck you plan on purchasing so that you can be alerted of any undisclosed mechanical conditions prior to pulling the trigger on the purchase. Certified pre-owned means this step has been taken care of, and the manufacturer’s warranty backs up the promise that the vehicle you’re purchasing is as good as new.
Certified Pre-Owned versus Regular Used Cars
While a certified pre-owned car will provide you more peace of mind after purchase, better deals can be found in the broader used car marketplace. If you’re willing to pay close attention to the history of the used cars you’re looking at, and have the used car inspected by a trusted mechanic, you can generally be assured you’re purchasing a good vehicle.
At the end of the day, it’s all about what’s more important to you. Do you prefer peace of mind with a manufacture’s warranty, or some extra savings? Take the time to investigate the options in all of the market segments in your area, and you’ll find the perfect vehicle to fit your budget and your family’s needs!