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Certified Used Cars and Questionable Credit Buyers

There are advantages but also disadvantages in financing certified used cars for car buyers that have experienced credit problems in the past
Certified Used Cars and Questionable Credit Buyers
Giving buyers choices

Credit challenged car shoppers often have a choice when it comes to picking out which used car to finance. That’s because, in many cases, even buyers with poor credit who have received an approval for a car loan are given the choice of either a regular used car or a certified used car.

At Auto Credit Express we also understand the confusion this can cause as we’ve spent the last twenty years helping car buyers with damaged credit find those dealers that can give them their best opportunities for auto loan approvals.

So let’s take a look at what makes certified used cars different from their regular counterparts.

Certified used cars

Manufacturer-backed certified used car programs work like this: If a vehicle that has been traded in, turned in from a lease or purchased at an auction meets certain age and mileage requirements, it then qualifies for an inspection program if the new car dealer so chooses. Following the required replacement of specific worn, broken or defective parts, dealers can then sell them with a manufacturer-backed warranty (a used car service contract from the manufacturer).

Because of the added costs involved for the inspection, the warranty and the replacement of parts, these certified used cars are then sold at a premium over regular non-certified used cars.

What is and is not covered under a warranty varies by manufacturer. Jaguar offers a 6 year/100,000 mile limited warranty (much like their new cars) along with a vehicle history report, 24 hour roadside assistance, complimentary oil and filter changes and a slew of other features. Certified used

Chryslers, on the other hand, come with a 3 month/3,000 mile limited warranty along with a 7 year/100,000 mile powertrain warranty (with the owner responsible for a $150 deductible amount on both), a Carfax vehicle history report and a 3 month subscription to Sirius satellite radio (in vehicles so equipped).

Certifying used cars

Both of those programs are certified by their respective manufacturers. Unfortunately, just because a dealer advertises a car as certified doesn’t necessarily mean its part of a manufacturer-backed program.

What this means is that buyers need to check that the certified used car they’re looking at is backed by a manufacturer’s program, not one set up by just the dealer. If it isn’t, buyers may be required to pay for any repairs up front and submit a claim to an independent warranty company for reimbursement – a situation much less desirable.

Something to keep in mind: only franchised new car dealers can participate in manufacturer-backed certified used car programs. These programs aren’t available to independent used car dealers including BHPH car lots.

Pros and cons to certified used cars

There are both plusses and minuses when it comes to buying certified used cars, mainly because they can cost hundreds of dollars more than their non-certified counterparts. Because of the pricing difference, it pays to research the model you’re considering.

Here are some tips that might help:

• Check websites like consumerreports.org where, for a fee, you can look up the repair records of a particular model. A spotty record means considering either a certified model or a non-certified model with a service contract – then comparing the differences in price and coverage (systems, deductible, etc.) between the two. A good repair record makes the decision more difficult.

• Run an AutoCheck or Carfax report on any non-certified car you’re considering (most certified used cars include one of these reports). If the report is clean and adding a service contract still means it’s more affordable that the certified model, it may be hard to justify paying the additional cost of the certified used car.

• Kelley Blue Book now lists the values for both certified and non-certified used cars, allowing you to better compare the prices of both types against their average selling prices.

• Have any vehicle you choose, certified or otherwise, inspected by an ASE certified master mechanic and have its body inspected by a frame specialist just to be sure before signing on the dotted line.

Finding a dealer with damaged credit

One more thing that’s good to know: Auto Credit Express specializes in helping applicants with car credit issues find dealers that can give them their best chances at approved auto loans.

So if you’re ready to reestablish your auto credit, you can begin now by filling out our online auto loans application.

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