Consumers who have steered clear of certified pre-owned (CPO) vehicles because they can’t get financing for the premium dealers charge for them may have some good news in store. Automotive News recently reported that, effective September 1, 2012, the NADA Used Car Guide listings now include CPO retail values.
What does this really mean for you, the consumer? Let’s take a look.
Certified used vehicles undergo a rigorous and comprehensive vehicle inspection, but the programs vary from manufacturer to manufacturer.
Lexus will only sell vehicles that are 6 years old or less, with less than 70,000 miles. The warranty is 3 year/100,000-total mile limited warranty that start on your date of purchase. The warranty is non-transferable and dealer certification includes a 161-point vehicle inspection.
Cadillac Certified Pre-Owned Vehicles must be less than 4 years old and have less than 50,000 miles. The warranty is 6 year/100,000 mile limited warranty from the date the car was first sold. The warranty is transferable and the dealer certification includes a 172-point vehicle inspection.
The Ford CPO program only sells vehicle that are 6 years old or less and have less than 80,000 miles. The warranty is 12 month/12,000 mile comprehensive warranty from time of sale, and 7 year/100,000 mile limited powertrain warranty. There is a $100 deductible on Ford CPO vehicle (Lexus and Cadillac have $0 deductible), and the warranty is transferable. Like Cadillac, Ford CPO vehicles undergo a 172-point vehicle inspection at the dealer.
According to the story in Automotive News, the values in the NADA Used Car Guides reflect the typical premium that’s added to the retail value of a used vehicle sold under a factory-certified CPO program at a franchised new car dealer.
This helps consumers obtain financing from lenders, which previously typically didn’t allow a certification premium when financing certified used vehicles. That meant consumers had to fork over extra cash to cover the premium.
The new listings in the NADA Used Car Guide show a premium for every used car eligible for certification from the factory. It is included as an add-on in the optional equipment area.
How much does certification add to the price of a used vehicle? According to the NADA Used Car Guide, certification adds about $1,000 to $3,200 to the price of the used car. NADA factors in vehicle age, certification program requirements, and depreciation rates. The NADA also uses actual sales transaction records (from manufacturers that provide such data) for certified and non-certified vehicles.
So, while you can expect to pay a bit more for a CPO vehicle, having the confidence that you’re buying a vehicle that’s backed by a factory warranty should make up for the extra cost. That, and the fact that financing should be a bit easier to obtain to pay for that CPO vehicle – assuming your lender is one of those willing to include the CPO premium in the amount financed. At least now they’ll have comprehensive guidance on the matter to help them decide.