CPO programs provide customers with an extended warranty on the engine and drivetrain that, unlike third-party warranties, is actually continued protection by the factory and is honored at any of that manufacturer's dealers. Third-party warranties--effectively insurance policies--are, like medical insurance, accepted at some places and not at others. There's often a deductible, and the consumer may have to pay for repairs and file for reimbursement. It beats not getting reimbursed at all, but a factory warranty is--by far--the better choice.
Vehicles that fall within the manufacturer's maximum age and mileage limits will undergo an inspection containing anywhere from 100 to 300 criteria. (The actual number of inspection points gets inflated by marketing, but it's still an inspection.) Some cars fail and can't be sold as certified. Others may need minor service to qualify, and the best sail right through. Even brakes and tires with life left in them won't pass muster for most certification programs. For example, tires on Toyota certified used cars must all match, so you won't find two new no-name discount tires mounted on a car that has a pair of mostly worn premium-brand tires on the other end. Brake pads must have at least half their material remaining, or they're replaced. While not every flaw can be detected, this process helps identify quality inventory.
Another attraction is that manufacturers offer financing for CPO units that's as cheap, or nearly so, as for new cars. Toyota boasts that customers can get the same financing on new and certified used cars, but companies that have subsidized interest rates on new models obviously aren't going to slap zero-percent financing on used cars. Otherwise, shopping certified pre-owned is little different from looking for a new vehicle. Most OEMs even allow you to Web-search dealer inventory nationwide for certified pre-owned models.
One downside of shopping for a certified used car is that each manufacturer has only its own cars, so you can't shop for Camrys and Accords or Explorers and Pathfinders at the same dealer. This may mean a bit more legwork for two out of three buyers, as J.D. Power surveys conclude that 65 percent of used-car shoppers didn't know what kind of car they'd buy when they began looking.
Consumers can shop for a wide variety of vehicles at places like CarMax, the self-proclaimed used-car superstore that has set out to "retailize" the process of buying a used product. CarMax has 38 locations today, with plans for another 25 or 30 stores by 2006. The company maintains huge lots with a broad selection of late-model used vehicles, and customers can check a store's inventory online before they even visit. "Being able to go to one place to drive all the makes and models that fit the subset you're looking at is a huge advantage," says Joe Kunkel, CarMax senior VP of marketing and strategy.
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