Should I Buy a New or Certified Pre-Owned (CPO) Car?

There are pros and cons to buying both new cars and certified pre-owned (CPO) cars. Understanding exactly what those pros and cons are will enable you to make the best buying decision.

Before diving straight into the pros/cons of new versus certified pre-owned vehicles, it is worth taking a moment to explain what a certified pre-owned vehicle is. The certified pre-owned programs started back in the 1990s when dealers and manufacturers were seeing greater numbers of gently-used leased vehicles returning to dealership lots. Knowing that these vehicles were still high-quality and had a lot of life in them, dealers and manufacturers teamed up to create a program to show buyers that these vehicles were still a great value.

The result of the dealers and manufacturers' efforts are the certified pre-owned programs that are offered by almost every manufacturer today. Although CPO inventory isn't limited to returned leased vehicles, all the vehicles that are listed as CPO must meet rigorous quality standards.

CPO cars are generally no more than 3 or 4 years old and have less than 50,000 miles on them (although mileage on some CPOs is as high as 80,000 miles). The vehicle must go through a rigorous inspection process at the dealership in order for the dealer to list it as a CPO vehicle.

Although each manufacturer has slightly different inspection criteria, they typically include between 100 and 200 inspection points so that the buyer is very confident that s/he is getting a high quality vehicle. Manufacturers provide buyers with additional assurance by including an extend warranty to cover any unexpected issues.

Now that we have discussed CPO basics, let's take a look at the pros and cons of both CPO and new vehicles:

Certified Pre-Owned Cars:

Pros

• CPO vehicles have many of the same benefits of new cars (in terms of quality assurance and warranty protection) at a more affordable price.
• CPO vehicles retain their initial value better than new cars. While CPO cars will still depreciate, as soon as you drive off the lot, the depreciation the car suffers is much less than the depreciation new car owners see.
• CPO programs put high-quality, almost new vehicles that would otherwise be out of buyers' price range within reach. This is true for almost all makes and models but this especially applies to higher-end vehicles or trims.
• Cons
• CPO vehicles are more expensive than comparable used vehicles. For example, a CPO 2009 Honda Civic LX with 30,000 miles will be more expensive than a used (not certified pre-owned) 2009 Honda Civic LX with 30,000 miles. The extensive dealer inspection and added manufacturer warranty account for the price difference.
• Even though you will pay a premium for a CPO vehicle, you will not necessarily get that premium back when you sell the vehicle.

New Cars:

Pros

• You know that you are getting the highest quality vehicle with the most amount of protection. All new vehicles include a comprehensive warranty package (such as Toyota's Extra Care Warranty) that covers virtually any repair you may need due to normal use or defective parts for a limited period of time, typically around 3 years or 36,000 miles.
• The satisfaction that you are getting your own, completely new vehicle that no one has ever owned before.
• Cons
• New vehicles depreciate considerably the moment you drive it off the dealer lot. The amount a vehicle depreciates depends on the make and model, but this depreciation can be as high as several thousand dollars.
• Price. New cars are expensive and all of us face budget constraints. You might have to sacrifice trim style or features to get the vehicle you want to fit your price range.

Michael Buonocore is the cofounder of AutoRef.com ( http://autoref.com ).

Source: http://ezinearticles.com/6324317

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