Consumer Car Buying Advice Blog

A certified used vehicle can give you peace of mind but it comes at a price.

Your second decision

At Auto Credit Express, we can see why many bad credit car loan shoppers decide that it is more cost effective to go with a 2 or 3 year old pre-owned car rather than a new one.  With the quality and durability of cars being what they are today, this decision makes sense. Now you’re faced with another decision: should you buy a regular used car or a certified used car?

Certified used cars

Back in the early 1990’s, luxury car manufacturers were faced with a large number of lease turn-in vehicles. Since most of these cars were leased through their captive finance companies (such as Mercedes Benz Credit and BMW Credit) and the vehicles weren’t holding their value when they were sold at the auto auctions, the car companies came up with a solution: If the vehicles met certain age, mileage and inspection requirements, their dealers could purchase the cars back and sell them with an extended service contract very similar to the warranties found on their new cars (with the exception that the number of miles and years was extended to cover up to 3 additional years and a total of 100,000 miles).

Due to this additional service coverage (from the manufacturer), the dealer could sell the vehicles at a premium over non-certified vehicles. As a result, the vehicles held their values better and, with this increase in value, the manufacturers were able to lease their new vehicles for less (due to the higher used car values established by the certified vehicles). It was a win-win for both the manufacturers and their dealers.

Jumping on the bandwagon

Noting the success that these luxury brands were having, most of the other manufacturers joined the party, offering similar programs. What is or is not covered by these certification programs varies widely. Jaguar, for instance, offers a 6 year/100,000 mile limited warranty (much like a new car) with a Carfax buyback guarantee, along with 24 hour roadside assistance, complimentary oil and filter changes and a slew of luxury amenities. Chrysler, on the other hand, offers a 3 month/3,000 mile limited warranty along with an 8 year/80,000 mile powertrain warranty and a Carfax vehicle history report, along with service coupons.

What is “certified”?

The term “certified” is extremely vague. And while it was the manufacturers that originally came up with the term “certified”, this doesn’t prevent dealers, or anyone else for that matter, from starting their own “certified” used car program. So pay attention when you’re shopping: just because a dealer advertises a car as certified does not mean it is certified by the manufacturer.

If it is the manufacturer’s program that you’re interested in, be sure you know that the “certified” car you are considering is certified by the manufacturer. If not, you could be in for any number of unpleasant surprises once you’ve purchased your car, including the fact that you may be required to pay for any repairs up front and submit the receipts to the warranty company for reimbursement – a process that is much less desirable than that offered by the manufacturers.

Other kinds of used cars

Due to the difference in pricing between a certified and non-certified used car (the cost of the service contract, a rather expensive one, is added to the price of all certified used vehicles), it would certainly be worthwhile to do some research to compare prices of both kinds of used cars.

Buying a membership to Consumer Reports will allow you to go to their web site to find out about the repair histories of the various vehicles you are considering. If the repair history of a vehicle is spotty, consider either a certified model or one with a service contract – and compare the differences in price and coverage (systems, deductible, etc.) between the two. If the repair history is stellar, have an ANSI Certified Master Mechanic do a thorough inspection of the non-certified car (a worthwhile expense). If the mechanic’s report is clean, you might not be able to justify paying the increased price for the certified car.

The Bottom Line

As you can see, there are a lot of choices out there if you’re looking at a used car. Ultimately, you will have to decide for yourself if a certified used car is worth the difference in price.

Here at Auto Credit Express, we help customers reestablish their credit by matching them up with dealers who specialize in bad credit car loans. For more information, visit our web site at www.autocreditexpress.com.

Tags: bad credit, bad credit car loan, bad credit car loans, bmw, car loan, car loans, carfax, certified used cars, chrysler, consumer reports, jaguar, mercedes benz

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