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Certified Pre-Owned Vehicles Explained

Certified Pre-Owned Vehicles Explained

Certified pre-owned (CPO) vehicles have become a popular option for used car buyers looking to find a happy medium between the lower cost of a used car and the peace of mind of buying new. But what exactly does “certified pre-owned” mean? In this comprehensive guide, we’ll explore what makes a car certified pre-owned, the key benefits these vehicles offer, how they differ from regular used cars, and whether the premium cost is worthwhile.


We’ll provide an in-depth look at the rigorous inspection and reconditioning process CPO cars go through, the warranty coverage they come with, and why features like higher resale value and lower financing rates may make them a smarter choice over a standard used car. We’ll also offer tips on researching CPO programs and inspecting certified vehicles so you can make an informed decision. Read on for everything you need to know about certified pre-owned cars.v

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What is Certified Pre-Owned?

Certified pre-owned (CPO) vehicles refer to used cars, trucks, and SUVs that have undergone extensive inspection, reconditioning, and warranty coverage by the manufacturer. To qualify as certified pre-owned, a vehicle must meet strict age and mileage requirements set by the automaker.

Specifically, certified pre-owned vehicles are typically less than 5-6 years old with fewer than 80,000 miles on the odometer. They have been thoroughly inspected by trained technicians at the dealership as per the manufacturer’s certification checklist. Any necessary repairs or reconditioning is completed to bring the vehicle up to near-new condition.

Once a used vehicle passes this rigorous inspection and reconditioning process, the automaker certifies it as a CPO model. This designation gives buyers the assurance that the vehicle meets the manufacturer’s high standards to be sold as a certified pre-owned car. The automaker’s extended warranty coverage also backs these vehicles.

 

Rigorous Inspection Process

One of the key components that sets certified pre-owned vehicles apart is the rigorous inspection process they must go through. Before a used vehicle can be certified by the manufacturer, it undergoes a comprehensive multi-point inspection by factory-trained technicians.

This inspection covers all major vehicle systems and components. Technicians will inspect the engine, transmission, drivetrain, suspension, brakes, electrical components, and more. Fluids, belts, hoses, tires, and brake pads are all examined. The goal is to identity any issues or wear items that need repair or replacement.

In addition to the inspection, certified pre-owned vehicles must also undergo any reconditioning or repairs needed to meet the manufacturer’s standards. Things like brake repairs, new

tires, fluid changes, light bulb replacements, and more may be performed. The interior and exterior are detailed to like-new condition. This ensures the vehicle is in excellent mechanical and cosmetic shape before being certified.

The multi-point inspection combined with the reconditioning process is what sets certified pre-owned vehicles apart from regular used cars in terms of quality, reliability and peace of mind. Buyers can feel confident these vehicles have been thoroughly vetted by factory experts.

 

Backed by Warranty

One of the key benefits of certified pre-owned vehicles is that they come with extended warranty coverage. This provides buyers with peace of mind knowing that major repairs will be covered should issues arise down the road.

The extended warranty terms on CPO vehicles can vary, but they typically add 1-2 years or 10,000-40,000 miles of coverage beyond the original new car warranty. For example, if the original warranty was 3 years/36,000 miles, the CPO warranty may extend it to 5 years/75,000 miles from when the car was first sold as new.

It’s important to closely examine the warranty details, as they can differ between automakers and even dealerships. The warranty may exclude certain items like brake pads, tires, alignments, etc. There is often a deductible per repair visit as well. However, the major components like engine, transmission, drivetrain are typically covered.

The CPO warranty provides coverage beyond what you’d get on a regular used car purchase. However, it is not as comprehensive as a new car warranty. Review the contract so you fully understand what is and isn’t covered before purchasing.

 

Why Choose Certified Pre-Owned?

There are several key benefits that make certified pre-owned vehicles an attractive option for many car shoppers.

 

Peace of Mind

One of the top reasons buyers choose certified pre-owned is for the peace of mind these vehicles provide. Since CPO cars undergo rigorous inspections and reconditioning, buyers can feel confident the vehicle is in excellent mechanical shape with no hidden issues. The warranty coverage offered by manufacturers also provides assurance that any repairs will be covered for an extended period.

 

Manufacturer Backing

The “certified” status means the vehicle has met the standards set by the manufacturer for their CPO program. This manufacturer certification provides a level of trust and backing that gives buyers confidence in the vehicle’s quality.

 

Warranty Coverage

Most CPO programs come with extended warranty coverage beyond the original new car warranty, typically 1-2 years. This protects against expensive repair bills down the road. Many CPO warranties also include roadside assistance benefits.

 

Savings over New

While certified pre-owned models cost more than regular used cars, they can provide big savings compared to buying a new vehicle. The near-new condition and warranty coverage comes at a lower price point than new. This allows buyers to get more car for their money.

 

Higher Resale Value

One of the key benefits of choosing a certified pre-owned vehicle is that it will typically hold its value better over time compared to a regular used car. CPO cars tend to depreciate at a slower rate and have higher resale values down the road. This is due to the rigorous inspection and reconditioning process they go through before being sold as certified pre-owned.

Buyers looking for a used vehicle can have more confidence that a CPO car has been thoroughly checked over and repaired as needed by the dealer. This peace of mind leads to stronger demand for certified pre-owned models on the used market. Since they are sold with warranties and are generally newer with lower mileage, CPO vehicles command higher resale prices.

Industry data shows that certified pre-owned cars retain their value better and depreciate around 2-3% slower per year than non-certified used cars of the same make, model and year. For example, a 3-year old CPO vehicle may retain 60% of its original value, while a regular used car of the same age may only retain 50-55% of its initial price.

The improved resale value of CPO cars makes them attractive for buyers who don’t plan to keep the vehicle long-term. The potential higher trade-in or resale price down the road can offset some of the premium paid for a certified pre-owned model initially. In the long run, choosing a CPO can pay off when it comes time to sell thanks to the stronger retained value compared to normal used cars.

 

Lower Interest Rates

One of the key benefits of choosing a certified pre-owned vehicle is the potential to qualify for lower interest rates on financing. Since CPO cars have undergone rigorous inspections and reconditioning, lenders view them as lower-risk loans compared to regular used cars. This allows buyers with good credit to often qualify for interest rates very close to new car rates, which are typically in the 2-5% range.

Specific interest rate discounts will vary by lender and individual creditworthiness. However, on average, CPO buyers enjoy interest rates about 1-2% lower than rates for comparable non-certified used cars. This can equal significant savings over the life of the auto loan. With average used car rates around 6-10%, a 1-2% discount on a 5-year loan could save over $1,000 in interest payments. This makes financing a CPO vehicle much more affordable.

In addition to better rates, certified pre-owned cars may qualify for longer-term loans up to 72-84 months. This further reduces the monthly payment. Overall, the financing terms and interest rate discounts available make CPO vehicles attractive for buyers using financing. The savings compared to regular used car loans provide another good reason to consider certified pre-owned.

 

How CPOs Differ from Regular Used Vehicles

Certified pre-owned vehicles differ significantly from regular used cars in a few key ways:

 

  • Newer Model Years – CPO cars are typically no older than 5-6 years old. This means they have the latest styling and features.
  • Lower Miles – To qualify for certification, CPO cars must have relatively low mileage, usually under 80,000 km.
  • More Inspection and Repair – Before earning certified status, CPO cars undergo a much more rigorous inspection and any needed repairs.
  • Warranty – CPO cars come with extended warranty coverage for added peace of mind.

 

So while CPO vehicles cost more upfront than comparable non-certified cars, buyers get the benefit of a much newer car in like-new condition and manufacturer backing.

 

Factors To Consider When Buying CPO

When deciding if a certified pre-owned vehicle is right for you, there are several key factors to take into account:

 

Extended Warranty Details and Exclusions

The extended warranty coverage offered by CPO programs can provide great peace of mind, but be sure to understand what is and isn’t covered. Many warranties have exclusions for certain parts and conditions, mileage limits, deductibles, and may not be fully transferable to a new owner. Read the fine print to avoid any surprises down the road.

 

Premium Cost Over Similar Non-Certified Used

Certified pre-owned vehicles typically command a higher price over a comparable non-certified used car. Consider the price difference carefully and determine if the added cost is justified for your needs. The premium may be worth it for the warranty coverage, inspections, and manufacturer backing.

 

Whether Vehicle Met Certification Standards

Not all used cars on a dealer lot labeled “certified” necessarily went through the full certification process. Verify the vehicle has met all the standards and rigorous inspections required by the automaker’s CPO program. Also check that any issues identified were properly repaired prior to sale.

 

Manufacturer Programs

Each automaker’s certified pre-owned program has its own standards and benefits. Here’s an overview of some major brands’ CPO offerings:

 

Toyota

Toyota’s CPO vehicles can’t be older than 6 years old and must have less than 80,000 miles. They undergo a 160-point quality assurance inspection and get a 12-month/12,000 mile limited comprehensive warranty.

 

Honda

Honda vehicles with less than 80,000 miles and no older than 6 years old can qualify. Their multi-point inspection covers everything from engine to body. CPO Hondas come with a 1-year/12,000 mile limited warranty.

 

Ford

Ford certifies models up to 6 years old with under 80,000 miles. Their 172-point inspection includes a test drive. Qualifying vehicles get extended powertrain and bumper-to-bumper warranty coverage.

 

Hyundai

Hyundai CPO cars can’t exceed 60,000 miles or be over 5 years old. They pass a rigorous inspection and road test. Owners get 10 years/100,000 miles of powertrain warranty coverage.

 

Subaru

Subaru certifies vehicles no older than 6 years with under 60,000 miles. Their 152-point inspection covers everything from the engine to the interior. CPO Subarus come with a 1-year/12,000 mile limited warranty.

 

The Premium Cost

One of the biggest considerations with certified pre-owned vehicles is the premium you’ll pay over a comparable regular used car. CPO cars tend to cost anywhere from $1,000 to $3,000 more than a similar non-certified used vehicle.

While the price is higher, it’s still typically thousands less than you would pay for a brand new version of that same model. So you get some of the benefits of a new car, like an extended warranty, rigorous inspections, reconditioning and low mileage, but at a more affordable used vehicle price point.

The premium paid provides more confidence in the vehicle’s condition and reliability. But you’ll want to weigh the extra cost against the included perks to decide if it’s worthwhile for your particular situation and budget.

 

Is Certified Pre-Owned Worth It?

When deciding if a certified pre-owned vehicle is worth the extra cost over a regular used car, there are pros and cons to weigh.

On the pro side, a CPO car provides:

 

  • Extended warranty coverage for added peace of mind
  • Rigorous inspections and reconditioning by the dealer
  • Near-new vehicle condition
  • Manufacturer backing and stringent certification
  • Higher resale value down the road

 

However, potential drawbacks include:

 

  • Higher asking price than comparable non-certified used
  • Interest rates may still be higher than new car financing
  • Warranty may exclude certain items
  • Vehicle may not have qualified for certification

 

Ultimately, certified pre-owned vehicles make the most sense for buyers who prioritize peace of mind and reliability, and want the assurance that comes with warranty coverage and dealer inspections. For budget-focused buyers, a non-certified used car may be a better value.

Carefully consider your needs and weigh the CPO benefits versus potential drawbacks before deciding if paying the premium for a certified car is worthwhile.

 

Buying Tips

If you decide a certified pre-owned vehicle is right for you, here are some tips for getting the best deal:

 

Inspect Thoroughly

Even though a certified pre-owned car has passed inspection, you should still give it a thorough looking over yourself. Check for any cosmetic issues, signs of wear and tear, and anything that seems amiss. Look under the hood and take it for an extensive test drive.

 

Review the Warranty

Make sure you understand exactly what is and isn’t covered under the CPO warranty. Know the length, mileage limits, deductibles, and any exclusions. This will help you determine if the warranty provides value.

 

Ask About Repairs

Find out what repairs and reconditioning were done to get the car certified pre-owned ready. Any major issues that needed fixing? Ask to see repair invoices to understand the work done.

 

Compare Programs

If looking at CPO vehicles from different automakers, compare their certification checklists and warranty coverage. This can help you determine which offers the most thorough program.

 

Negotiate the Price

Certified pre-owned cars tend to cost more than similar non-certified used vehicles. But you can still negotiate! Compare prices online for similar vehicles and use as leverage. Aim for at least 10% off the asking price.

 

Consider an Extended Warranty

Even though CPO vehicles come with a warranty, you may want to purchase an extended warranty for added coverage once the original warranty expires. This provides further peace of mind.

 

Conclusion

Certified pre-owned vehicles offer significant benefits compared to regular used cars, but also come at a premium price. When deciding if CPO is right for your needs and budget, weigh the pros and cons.

On the pro side, CPO cars provide peace of mind thanks to rigorous inspections, manufacturer backing, warranty coverage, and a vehicle history report. The certification process reconditions the vehicle to near-new condition. Many find the added reliability and warranty protection worth the extra cost over a standard used car.

However, CPO vehicles do cost more, sometimes significantly more, than similar non-certified options. Review the fine print to understand exactly what is and isn’t covered under the extended warranty. Not all CPO programs are created equal. Carefully compare trim levels and mileage when evaluating the premium price of a CPO model.

For buyers wanting a lightly used, manufacturer-approved vehicle but not ready to pay new car prices, certified pre-owned offers an appealing middle ground. Weigh your budget and priorities to decide if the benefits of CPO make sense for your situation.

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Questions About Certified Pre-Owned Vehicles

A certified pre-owned (CPO) vehicle in Canada is a used car that has undergone a series of inspections, reconditioning and repairs to meet higher standards compared to a regular used vehicle. Manufacturers certify these vehicles and they typically come with extended warranty coverage, roadside assistance, financing incentives and other benefits. CPO vehicles in Canada need to pass between 150-200 point inspections and be no older than 5-6 years old with less than 120,000 kms.



Some key benefits of buying CPO vehicles in Canada include:

 

– Peace of mind from the rigorous inspections and reconditioning

– Extended warranty coverage beyond the original new car warranty

– Roadside assistance in case of breakdowns

– Lower interest financing incentives from dealerships

– Ability to purchase recent model year vehicles for less

– Option to upgrade to newer safety tech and features

No, not all car brands operating in Canada have official certified pre-owned programs. Some of the major brands that do offer CPO vehicles include Toyota, Honda, Ford, GM, Nissan, Hyundai, Kia, Mazda, Subaru and Volkswagen. High-end luxury brands like Mercedes-Benz, BMW and Audi also have CPO programs in Canada. Brands without CPO typically sell third-party certified used vehicles.

Certified pre-owned warranties in Canada provide coverage for mechanical and electrical breakdowns after the new car warranty expires. This extended coverage typically lasts for 6 years or 120,000 kms from the in-service date, whichever comes first. Exact repairs covered can vary, but generally includes the engine, transmission, drivetrain, electronics, steering, brakes, electrical components and more. Exclusions like wear items may apply.



When buying CPO vehicles in Canada, there can be both additional fees rolled into the pricing or charged separately upon purchase. These extra costs may include:

 

– Certification fee – For inspection, reconditioning and warranty

– Documentation/Admin fees

– Safety certification charge

– Licensing and registration costs

– Provincial sales taxes

– Additional options, packages or accessories



Yes, certified pre-owned vehicles typically cost $2,000-$4,000 more on average compared to similar non-certified used vehicles in Canada. The increased pricing accounts for the more rigorous inspections, mechanical reconditioning, extended warranty coverage and other CPO benefits that come with it. Despite the premium over regular used, CPO still offers big savings over new.

Some good questions to ask when purchasing CPO vehicles in Canada include:

 

– What are the exact terms of the extended warranty coverage?

– Can I see a copy of the vehicle inspection checklist and reports?

– What repairs or reconditioning were done to certify the vehicle?

– Are there any remaining manufacturer warranties still active?

– What preventative maintenance has been performed and are records available?



Buying a certified pre-owned vehicle can help lower your auto insurance premiums in Canada thanks to the rigorous inspections and mechanical reconditioning they undergo. CPO models tend to experience fewer claims due to good condition and warranty coverage. Less risk generally equals lower premiums. Always get quotes from providers when buying any vehicle.

Yes, the certified pre-owned designation does not preclude buyers from negotiating on price with dealers in Canada. While CPO models tend to be priced closer to market value, additional discounts may still be available. Consider bundling offers, trading in a vehicle, buying previous model year CPO or shopping end of month when salespeople need to hit quotas.

Determining if a certified pre-owned vehicle is worth the extra cost comes down to the exact condition, repair and accident history and whether warranty coverage and inspection reports can provide peace of mind. Comparing prices and components covered between similar CPO and non-certified used vehicles can also help assess the value. Test drives and independent inspections help too.

Some of the best CPO models to consider buying in Canada include:

 

– Toyota RAV4 – reliable, fuel efficient and popular SUV

– Honda Civic – affordable, efficient and practical sedan

– Ford F-150 – capability truck with plenty of choice

– Subaru Forester – safe and capable small SUV

– Mazda CX-5 – fun driving and upscale compact SUV

– Hyundai Kona – feature packed subcompact crossover

Yes, most certified pre-owned programs at dealerships in Canada come with financing incentives and support as an additional benefit. This includes special lower interest rate offers from the automaker’s financial division on CPO vehicle purchases. Always compare rates from banks and other third-party lenders as well.

When purchasing a CPO vehicle in Canada, important documents to obtain copies of include:

 

– Inspection checklist report

– Any repair orders or receipts

– Extended warranty booklet

– Ownership transfer paperwork

– Bill of sale

– Registration and insurance paperwork

– Active manufacturer warranty details

– Service history records



The ability to return a certified pre-owned vehicle if unsatisfied depends on provincial consumer protection laws and individual dealer policies in Canada. In some areas, you may qualify for an unwinding period to void the sale within a few days. Otherwise, thoroughly check CPO vehicles before purchase and review cancellation terms in the sales contract.

Tips for inspecting a certified pre-owned vehicle yourself before purchase in Canada:

 

– Review the certification inspection checklist and reports

– Match VINs on all paperwork to the vehicle

– Verify no accident or claims history via Carfax/Carproof

– Look for paint quality, body panel gaps and rust

– Check all interior features and electronics function

– Drive vehicle to check steering, acceleration and brakes



Important questions to ask the dealership when purchasing a certified pre-owned vehicle in Canada:

 

– Why was the vehicle traded in or turned in?

– Does it have complete service records from this dealership?

– What repairs or mechanical work was done for certification?

– What remaining warranties transfer and what’s covered?

– Does the price include licensing and registration fees?

Some potential discounts to help save money on certified pre-owned vehicles from dealers in Canada include:

 

– Special low factory interest rate financing

– Dealership coupon offers and cash rebates

– Trade-in overallowance promotions

– Loyalty rebate for current owners

– Price reductions on previous model years

– Preferred pricing for first responders and military



The typical certified pre-owned certification process in Canada includes:

 

  1. Vehicle is acquired as a lease return or trade-in
  2. Multi-point inspection and diagnostic scans performed
  3. Any mechanical or cosmetic repairs done to fix issues
  4. Final quality control checklist verification
  5. Certification paperwork, branding and extended warranty issued



Once the extended certified pre-owned warranty coverage expires after 4-6 years in most cases, owners in Canada have the option to purchase extended protection plans to continue coverage. Otherwise they will need to pay out-of-pocket for any future vehicle repairs just like a regular used vehicle without warranty. Always budget for future maintenance.



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