What’s the deal with certified used cars?
Certified Used Cars (CPOs) are sometimes called the crème de la crème of used vehicles. But like most things, you might be wondering if there is a catch. Here’s the scoop on CPO cars and what sets them apart from your regular used vehicle.
What is a CPO vehicle?
Let’s first see what a CPO car is. These are used vehicles, but what sets them apart from a typical used car is that they are covered by a warranty and are inspected.
A CPO vehicle comes with a manufacturer’s warranty – either the factory warranty or an extended warranty. To be considered a real CPO car, it must be inspected by a manufacturer certified mechanic and meet the manufacturer’s standards for CPO cars. These guidelines vary by car manufacturer, but can usually be found on their respective websites.
It is also common for non-rental vehicles to become CPOs. Often times, leased cars are driven for a few years, returned, then cleaned and inspected to be sold as a CPO. Non-rental vehicles tend to have fewer miles and less wear and tear than your regular used car.
When you fund a CPO, that means you typically get a vehicle that:
- Is in good cosmetic condition
- Less than five years old
- Less than 60,000 miles
- Has a guarantee
Again, each automaker’s specific thresholds for their own CPO cars will vary. Check the standards of each brand you are interested in individually for exact details.
All of these benefits add up and it means you’ll likely pay more for a CPO car than a regular used vehicle. It could be considered a “catch”, but is it really?
This is hard to say that CPOs come with a catchbecause they are often a great option for borrowers who want to drive a newer car without the hefty sticker price of a brand new car. In fact, it’s hard to find any downsides to CPO vehicles other than the fact that they don’t have the new car smell (but you can still buy an air freshener for that).
New cars vs CPO cars
If you are a bad credit borrower, a CPO could be a good alternative to buy a brand new car if you still want the new bells and whistles. New vehicles tend to lose a lot of value in the first year, often between 10% and 20% in 12 months. When you finance a CPO car, that big initial drop in value, called depreciation, has already happened since the vehicle is being used when you get behind the wheel.
Another bonus with a CPO over a new car is that the CPO isn’t as likely to put you in a negative equity position. New vehicles, since their value drops so quickly in the first year, tend to put their owners in negative equity early on until they can catch up.
Negative equity, also called being upside down on your loan, means you owe more on the car than it is worth. It is common to be in this situation when financing a new vehicle. But when you finance a CPO or a used car, your risk of having negative equity decreases as depreciation tends to slow over time; it never stops, but it shrinks.
Bad credit dealers and loan options
There is always a chance to get into a used vehicle that has underlying issues. But with a CPO car, that chance decreases even more because it is covered by a warranty and it has been inspected before it is returned to you.
Getting into a CPO vehicle means buying from a dealership. But, if your credit score isn’t the best, you might feel like you can’t work with a dealership. Think again and start with us at Auto Express Credit! We have a network of dealers from coast to coast who specialize in helping borrowers with credit.
To begin the process of getting back on the road, complete our auto loan application form. We will search for a dealer in your area with loan options for unique credit situations.