Buying a certified used car? 5 things you need to know

With sales of certified used cars heading for a record year, many buyers believe they are getting cars almost as good as new for a lower price. And such certified cars can be a bargain vs. a new version of that same model. But certified cars are still used cars, and you need to shop carefully and pay attention to all details of the transaction.

Sales of certified used cars are up 12 percent through May over a year earlier and seem likely to set an annual record. Such booming sales seem to suggest many satisfied buyers whose friends or family followed their lead to certified cars. But the market for certified used cars is more complicated than it might appear.

So if you are looking at the pros and cons of certified cars, you need to keep these five often-misunderstood points in mind:

  • Certified cars may cost less than you think. A popular notion is that certified cars may cost thousands of dollars more than regular used cars. But a study by the research site iSeeCars.com looking at 3.5 million used car sales in late 2014 and early 2015 found that dealers in all brands charged an average of just $722 more for a certified used car than a comparable car without certification.

Nine brands had premiums of less than $500 for certified cars (called certified pre-owned in industry jargon or CPO in many ads). They are Jeep, Dodge, Ram, Subaru, Honda, Mazda, Chrysler, Chevrolet and Buick.

But differentials tend to be higher for luxury brands. Lexus certified models sold for about $1,400 more than non-certified. And the premium was $1,600 for BMW, which advertises its certified program on television.

  • Not all certified programs are equal. Dealers may clean up a used car and call it certified -- based only on the dealership assurance. But with that situation, "Nobody is holding them to standards in order to be in the certification program," says Phong Ly of iSeeCars.com. Check to be sure that a certified program is backed by the manufacturer, he advises. In that case, Lexus or Ford or any other manufacturer will require an inspection of 125 or more features of the car. And the parent company will stand behind the warranty.
  • Details can vary greatly even among manufacturer certified programs. For instance, Fiat Chrysler models -- including Jeep, Dodge and Chrysler -- add just three months or 3,000 miles coverage in the new comprehensive warranty that goes with the certified car, but do continue a 7-year, 100,000-mile powertrain warranty from the date it was first sold as a new car. However, there is a $100 deductible if you bring the car in for repair.

Chevrolet and other General Motors brands add a 12-month, 12,000 miles new certified warranty and a five-year, 100,000 mile powertrain warranty from the date the car was first sold as new. The GM warranties have no deductible. To check on the details of certified warranties for brands you are considering, go to the certified cars program comparison at Edmunds.com.

  • Older cars can be certified as well as one-to-three-year old vehicles. Certified used cars are often discussed as used alternatives to new cars. And indeed, many certified cars are two- or three-year old models that are returned after a lease. But most manufacturers will certify cars up to five or six years old with 70,000 to 80,000 miles on the odometer. If are in the market for a car of this vintage, a certified vehicles might make sense. "With older cars, it is especially important to have some kind of warranty in place," says Phong Ly.
  • Certification doesn't guarantee a problem-free car. The image of certified cars -- bolstered by car industry advertising -- is that you will be worry-free with your vehicle. Compared with a new car, that certified car will have had a year or more for something to go wrong that might not be detected by the inspection. Or there could have been initial quality problems in the new car. Edmunds.com recounted complaints it had received about problems with certified used cars -- such as steering wheel shimmy at high speeds -- where it turned out that issue had been present even in new cars of that make and model from the same year.

Are certified used cars worth considering? If you do your homework carefully, your risk of having problems should be lower than with regular used cars. And, depending on the manufacturer, you get a variety of perks. GM provides free visits for scheduled maintenance for two years or 24,000 miles. Lexus provides a loaner car when your certified car comes in for service. And numerous manufacturers provide roadside service for certified cars similar to that for their new cars. For any of these features, though, be sure you have read all the fine print.

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    Jerry Edgerton, author of Car Shopping Made Easy, has been covering the car beat since Detroit companies dominated the U.S. market. The former car columnist for Money magazine and Washington correspondent for Business Week, Edgerton specializes in finding the best deals on wheels and offering advice on making your car last.