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Paying extra for a `certified preowned’ car isn’t always a good deal

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A friend was recently considering trading in her SUV for a compact car. She wondered whether a so-called certified preowned vehicle would give her the quality she wanted at a better price than buying new. I wondered whether the certified preowned designation was just a fancy marketing term designed to get consumers to spend more on a used car.

So I started researching. The answer, it seems, falls somewhere between her optimism and my cynicism.

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First, the basics: to be labeled “certified preowned,” or CPO, a used vehicle must meet certain standards laid out by the automaker. Many of these vehicles have been previously leased and therefore have been well maintained, with low mileage. CPO vehicles generally come with a warranty, either the remainder of the original warranty or supplemental coverage provided by the car company.

This peace of mind comes at a price: Certified preowned vehicles cost, on average, $1,500 more than uncertified used cars, according to automotive website Edmunds.com.

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So are they a good buy? If you are eyeing a luxury car, quite possibly, says Matt DeLorenzo, managing editor for automotive research company Kelley Blue Book. At higher price points, the discount over a new car is more significant. And luxury vehicles are likely to have adaptive cruise control, entertainment systems, and other advanced features, making the inspection and the warranty more appealing.

“Dealers will tend to cherry-pick the cars that will give them the least trouble,” DeLorenzo says. “There’s just so much more that can go wrong in a luxury car.”

Drivers seeking serviceable, budget-friendly transportation, however, probably shouldn’t bother with a CPO, he said – there are fewer advantages for the added cost. Ask yourself how much repair work you could pay for with the extra money you’d spend for a certified vehicle. Plus, some of the most common more affordable cars, like Hyundai and Kia, already have 100,000-mile warranties, making the protection offered by a CPO designation unnecessary in many cases.

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If you do decide to consider a certified preowned vehicle, make sure to read the fine print. Each automaker has its own inspection standards and warranty terms. For instance, Toyota boasts a 160-point inspection while Audi promotes a process that considers more than 300 items. Make sure you know what the certification covers so you can decide whether it is worth paying a premium.

Have a consumer question or complaint? Reach Sarah Shemkus at seshemkus@gmail.com.



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