Certified Pre-Owned Vehicles vs. Used Vehicles: What’s the Difference?

With the prices of new vehicles up 21% from 2020 levels and used car prices up 44%, many car shoppers naturally want to ensure they’re getting the best deal for their hard-earned money.

When it comes to buying a used car, a common question is whether you should get a certified pre-owned vehicle or a regular (non-certified) one. Both options have their pros and cons, and in this article, we’ll explain what they are.

But first, let’s go over what pre-owned and certified pre-owned vehicles are in the first place.

What is a pre-owned vehicle?

A pre-owned (or used) vehicle is a vehicle that has had at least one previous owner. Depending on the age of the car, it may be under warranty, but this is more rare than common.

You can buy pre-owned cars from used car dealerships or from private sellers. A quick online search will reveal several used cars for sale in your local area.

What is a certified pre-owned vehicle?

A certified pre-owned vehicle is a used vehicle that has been refurbished to meet certain conditions set by the manufacturer. They must undergo a thorough inspection and reconditioning process (if needed). They are typically accident-free, gently used, and have low mileage and come with warranty coverage from the original manufacturer.

Certified pre-owned vehicles can be a great option if you are looking for a car in like-new condition without actually paying for a brand new car (and suffering the steep depreciation in its first few years). They’re typically available for purchase at franchise dealerships that exclusively sell cars from one manufacturer.

Now that you know what pre-owned and certified pre-owned vehicles are, let’s go over the pros and cons of each:

Pros of pre-owned vehicles

• Lower price. Compared to an equivalent certified pre-owned car, a pre-owned car will be cheaper. Why? Because it doesn’t come with the same warranty or quality assurance as a certified vehicle. This can make pre-owned cars better for those on a tighter budget or who want to get a better or newer car model than they could through buying certified pre-owned.
• More options. Due to the stringent process of certifying pre-owned vehicles, there are many more non-certified pre-owned vehicles for sale than there are certified ones. This means a wider selection of vehicles to choose from.

Cons of pre-owned vehicles

• Higher risk. When buying a pre-owned vehicle, you never know what you’re getting. The car could be in any condition and may have hidden problems. As a result, it’s always a smart idea to have a trusted mechanic take a look before you buy.
• No warranty. Unlike certified pre-owned vehicles, pre-owned vehicles don’t usually come with warranties. This means if something goes wrong with the car, you’ll have to pay for repairs out of your own pocket (the caveat to this is if the original warranty hasn’t expired yet or you purchased an extended warranty, but this is uncommon).
• Higher financing rate. Because it can be more difficult to put a value on a non-certified pre-owned car, lenders may charge a higher interest rate to cover the extra risk.

Pros of certified pre-owned vehicles

• Warranty coverage. Certified pre-owned vehicles come with warranty coverage from the manufacturer. So if the vehicle needs a repair during the warranty period, you can get it fixed for free.
• Low mileage and age. Most certified pre-owned vehicles are only a few years old and have low mileage due to the conditions for certification set by manufacturers. This means your car will be more like new.
• Thorough inspection. Because certified pre-owned vehicles go through a comprehensive inspection, you can expect them to run without problems (at least for the first few years). According to Tiger Okeley at car dealership Oak Motors, “the inspection and certification guarantee add significant value to the buyer, who may have to spend a lot in repairs otherwise.”

Cons of certified pre-owned vehicles

• Higher price. Of course, certifying a pre-owned car comes with a price. Much of the extra work and cost of inspecting and reconditioning the pre-owned vehicle is passed on to the buyer.
• Limited choices. Only a limited number of used cars make the certified pre-owned grade. As a result, you’ll have fewer options to choose from if you limit yourself to certified pre-owned cars.

The final verdict

So which is better: certified pre-owned or pre-owned? This depends on your personal budget and situation.

For example, if you’re tight on cash, a pre-owned vehicle may be the best option. However, if you want the guarantee of a new car without paying the cost of one, a certified pre-owned vehicle may be the way to go.

Carefully weigh the pros and cons of each to make the best decision for you and your family.