Buying Certified Used Cars with Poor Credit

A recent report from NADA shows sales of certified pre owned vehicles are on the rise but are these vehicles a good choice for credit challenged car buyers?

Used Car Buying Choices

Buying Certified Used Cars with Bad Credit

Here at Auto Credit Express we realize that the majority of car shoppers with credit issues end up picking out a used car. This makes sense to us because used cars today are not only more affordable, they are, as a whole, more reliable than ever.

But even though they’re more reliable, it still usually makes sense to purchase a used car service contract, a perk that comes standard when buying a certified used car.

Certified Pre-owned According to NADA

According to the latest NADA report, CPO (certified pre-owned) sales through April of this year are up 11 percent over last year – well ahead of the 3 percent increase in new and used car sales in 2014.

“Sales for certified pre-owned vehicles really began to take off in 2012, due in part to recovering auto demand and an increased awareness of CPO vehicles among the more value-conscious post-recession consumer,” said Jonathan Banks, executive automotive analyst of NADA Used Car Guide. “As consumer awareness continues to grow and late-model supply increases, CPO sales are on pace to hit another record this year.”

So what makes CPO cars different?

Certified Used Cars

Manufacturer certified used car programs typically work like this: If a trade-in, lease turn-in or vehicle purchased at auction meets certain age and mileage requirements, it then qualifies for an inspection program. Following the inspection and the replacement of specific worn, broken or defective parts as outlined by the manufacturer, dealers can sell it with a manufacturer-backed used car service contract.

Because of the added costs for the inspection, parts replacement and service contract, these certified used cars are sold at a premium over their non-certified counterparts.

What is and is not covered by the service contract 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. Most certified used Chrysler’s, on the other hand, come with a 3 month/3,000 mile limited warranty along with a 7 year/100,000 mile powertrain warranty (from the original in-service date with the owner responsible for a $100 deductible amount on both), a Carfax vehicle history report and 24-hour roadside assistance.

Certified Programs

Just be sure the vehicle you’re looking at is part of one of these manufacturer programs. If not, you 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, especially if you know you’ll be paying higher bad credit auto loan rates.

Also, only franchised new car dealers can participate in these manufacturer-backed CPO programs – they’re not available to independent used car dealers including BHPH car lots.

CPO Buying Tips

Here are some helpful tips:

  • Be familiar with the vehicle model you’re considering. At you can, for a fee, look up the repair records of a particular model. A poor record means considering one that’s certified or a service contract with a non- certified model.
  • Compare the differences in price and coverage (systems, deductible, etc.) between certified and non-certified vehicle service contracts.
  • Since most CPO vehicles come with a vehicle history report, run an AutoCheck or Carfax report on anything non- certified you’re considering. If the report is clean and the addition of a service contract makes it more affordable that the certified model, it may be hard to justify paying the additional cost of the CPO vehicle.
  • Kelley Blue Book lists the values for certified and non-certified used cars, allowing buyers to better compare the dealer prices of both types to their average selling prices.
  • Be sure to have any vehicle you choose, certified or otherwise, inspected by an ASE certified master mechanic and have its body inspected by a frame specialist before signing on the dotted line.

The Bottom Line

CPO vehicles offer a number of advantages over those that aren’t certified. Just be sure paying the extra money for one makes sense.

One more tip: Auto Credit Express matches applicants with car credit difficulties with dealers that can offer them their best chances for a car loan approval.

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

Posted on July 9, 2014 by in Used Cars
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