Used cars: Absolutely Guaranteed. Well, maybe - MoneySense

Used cars: Absolutely Guaranteed. Well, maybe

If you think that buying a certified used vehicle will ensure you peace of mind, think again.

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We’ve all gone mad for certified products. A friend of
mine will only drink certified organic
coffee; another friend will only use a
certified financial planner. Now the
certified trend is reaching the used car
market, too. According to consumer researcher
J.D. Power and Associates, sales
of Certified Pre-Owned (CPO) vehicles
have been steadily rising in recent years.
The appeal is obvious: a CPO vehicle is
one that’s been certified fit by the original
carmaker, which means that, in
theory at least, you no longer have to
worry about buying a lemon.

Or do you? CPO programs can add
more than a thousand bucks to the price
of a used car and, if you look under the
hood, it’s not always clear what benefit
they deliver.

“With a certified used car you’re getting
the manufacturer’s guarantee on the fitness
of the vehicle, so you should be able
to have greater peace of mind,” says Michael
Turk, legal counsel for the Automobile
Protection Association (APA). However,
he notes that CPO programs vary
hugely in what they offer. Some extend the
original warranty for a year and offer you
roadside assistance if the car breaks down.
Others promise you only that a mechanic
has gone over the car and thinks it will be
okay — at least for the next few weeks. “You
really have to do your homework,” says
Turk. “If all you’re getting is a detailed
inspection
report, why bother?”

CPO cars are typically newer vehicles
with low mileage. They’re sold through a
carmaker’s factory dealer network, rather
than through independent used car dealers.
“You should expect to pay at least
$300 more for a CPO car than you would
for the same car bought at an independent
dealer,” says Phil Edmonston, author of
the  Lemon-Aid
used car guides. But according
to J.D. Power and Associates the added cost for CPO peace-of-mind can
range as high as $1,600.

What you get for that extra money depends
on where you’re shopping. If you’re
buying a CPO car from a Honda dealer,
your used vehicle will come with an extension
of the original powertrain warranty
of up to six years or 120,000 km, whichever
comes first. In addition, you’ll have seven
days or 1,000 km to exchange the vehicle
for another one if it doesn’t live up to your
expectations. As a bonus, Honda dealers
offer financing rates on CPO cars as low as
0.9% — a tiny fraction of what you would
pay at a bank. The APA’s Turk calls the cheap
low interest rates a “huge advantage” for
the majority of consumers who require financing
over three to five years.

Toyota offers a similar certified program,
but the CPO guarantees from some
domestic automakers seem scanty by
comparison. Ford offers no extended warranty
at all; it does, however, give buyers a
cooling off period with a money-back
guarantee for the first three days or
500 km of ownership. Ford also throws in
one year of free basic maintenance and
roadside assistance. Chrysler, on the other
hand, offers little more than a three-day or
500-km exchange period on its CPO cars.

If you’re considering a CPO vehicle, ask
the dealer to put down in writing exactly
what is covered. And try not to pay more
than the guarantee is worth. Despite some
of the claims you may hear from overenthusiastic
dealers, a CPO car isn’t just like
new. Turk and Edmonston offer four tips
to help you assess the deal:

Get a second opinion:
A certified car is
still a used vehicle — and that means its
brakes, tires and exhaust will all have some
wear. An independent mechanic can take
a look at these common maintenance
items and make sure the dealer’s mechanic
didn’t miss anything. Expect to pay $80
to $100 for an independent inspection.

Do a background check:
While you’re
getting your certified vehicle checked
under the hood, it’s also a good idea to
check out its life story. Even dealers can
get tricked, so a vehicle history report
from a web-based service like CarProof or CarFax is a great way to check for
hidden accident claims, unpaid liens and
odometer fraud. CarFax reports cost $25
for a single history or $30 for unlimited
reports. CarProof charges $35 to $60 for
each report, depending on the depth of
information provided.

Ask for the checklist: The
carmaker’s
mechanics are supposed to check off between
100 to 300 “points” before certifying
a vehicle for a CPO program. You
should ask for the checklist and keep it on
file so that if something does go wrong,
you can check the problem against the
initial inspection. If it was something that
was certified, you have a very strong case
for restitution.

Know who’s
covering you:
Ask who’s
behind the warranty. In general, a warranty
backed by the original manufacturer
is better than one offered by a
third-party company.

Under the hood

Different carmakers
offer very different levels of coverage in their certified pre-owned
programs. Make sure you know what you’re buying.

Manufacturer Inspection Warranty Bonus

Chrysler
Unspecified
“thorough” inspection
Three-day
or 500-km exchange
None
Ford 115-point
inspection
 Three-day
or 500-km money-back guarantee
One
year free basic maintenance, roadside assistance
General
Motors
150-point
inspection
Three
months or 5,000-km warranty. 30-day or 2,5000-km exchange privilege
Three
months  or 5,000 km GM Roadside Assistance
Honda 100-point
inspection
Extends
powertrain warranty to six years or 120,000 km. Seven-day or 1,000-km
exchange privelege 
Financing
as low as 0.9% on pre-owned cars
Totota 127-point inspection 12-month
or 20,000-km powertrain warranty. Seven-day or 1,500-km exchange
privilege
First
oil and filter change free