What Does Certified Pre-Owned Mean? Car Buying Explained

You may have seen the label CPO or Certified Pre Owned on a dealer ad. But what does certified pre-owned mean? It’s something people have heard a lot about but may not know what it is. The basic definition is it’s a used car sold by a dealership with an extended warranty, (sometimes) backed by the manufacturer. There’s been no better time to buy certified pre-owned because prices have narrowed between regular used cars and certified pre-owned. Not that long ago, it was going to cost you at least $1,000. Now the gap has narrowed down to less than $500 in a lot of cases. RELATED: Certified pre-owned cars that beat new ones According to a new study by iSeeCars, “Based on an analysis of more than 3.5 million used car sales, the findings indicate that dealers charged an average of $722 more (an extra 2.9 percent on average) for manufacturer certified pre-owned cars.” More surprising is the certified pre-owned price difference for Jeep is $289. For that price, you’re getting an extended seven-year, 100,000 mile powertrain limited warranty, three-month, 3,000 mile maximum care coverage, special financing offers, and 24-hour towing and roadside assistance. Plus you get nationwide warranty coverage. You buy a Jeep in Idaho, you can get it fixed in Delaware. RELATED: 2014 Jeep Wrangler Makes a Great Certfied Pre-Owned Vehicle It is important to know when "Certified" doesn't add up to peace of mind. For example, Bob’s Discount Used Cars can’t sell manufactured-backed certified pre-owned warranty. He can only sell you certified pre-owned vehicles backed by a third-party insurance company. Good luck filing claims for reimbursement. That’s why you only want to buy a certified pre-owned Chevrolet from a Chevy dealership. You want a manufacturer backing up your warranty – not an insurance company. RELATED: A 2014 Corvette Stingray Certified Pre-Owned? Certified pre-owned cars are making a lot of sense. You’re getting a lot of extra value for not a lot of extra cash. Dealers are willing to take the low margins because they usually get your service business. Certified pre-owned used cars have become the rule—not the exception—for used car buyers.