Understanding CPO Programs

Any consumer who is purchasing a new or used car needs to understand the consumer protection laws governing car sales, which include rules for warranties, as well as California motor vehicle lemon law. In particular, car buyers who are considering a Certified Pre-Owned (CPO) vehicle should understand exactly what certification means and how it does (or does not) provide them with benefits.

What Consumers Need to Know About Certified Pre-Owned Vehicles

Certified pre-owned vehicles are sold through car dealers and they carry a manufacturer's warranty. CPO cars are purchased from the original dealer, not from independent used car dealers or from private individuals.

They have to be inspected according to a process set by the car manufacturer, and they typically come with a warranty that is backed by the manufacturer and that extends the original warranty provided to new car buyers.

Certified pre-owned cars have some significant pros and cons, and consumers should understand exactly what they are getting involved in if they make the choice to buy these cars.  Consumer Reports recently published a comprehensive guide to CPO vehicles.

Some of the benefits associated with CPO cars include:

• Saving money as compared with new car prices. If you buy a CPO car that is two years old, you could save 25 percent off the price of buying a brand new car. If you buy a certified pre-owned car that is four years old, you could save up to 40 percent.
• Leasing is often an option with certified pre-owned cars, although this depends upon the dealer. If you lease, lease payments will be a lot lower than on a new car.
• Peace of mind. You can trust that warranties offered by the car dealer are backed by the manufacturer. Manufacturers also typically require a stringent inspection process before the car can become certified. Typically, the inspection is around a 150-point inspection, although some car dealers advertise up to a 300-point inspection.

While there are benefits, there are also downsides and things you need to carefully consider before deciding a CPO car is right for you. For example:

• CPO programs usually divide warranty coverage into a limited and power train warranty and the limited warranty is shorter.
• Brake pads, exterior paint, and many typical wear items are usually excluded from warranty coverage unless the problem is caused by a manufacturing defect.
• If a vehicle is a hybrid or electric vehicle, warranty coverage may be even more limited.
• CPO vehicles can cost more than similar cars which do not have manufacturer certification.

It is up to every consumer whether they feel they are better off buying a brand new car, a certified pre-owned car, or a car from a dealer or private individual that has not been certified. Regardless of what you choose, be certain that you know your rights, including understanding the scope of California’s lemon law, in case the car you buy turns out to be defective after you have spent the money to make the purchase.