Updated January 4, 2022 . AmFam Team
The prospect of hitting the lots to shop for a car is an exciting one. But with so many models and price points, it can be tough to figure out where to start! Before you visit dealers or test drive cars, it’s worth narrowing your search by determining if you’re in the market for a car that’s new, used or certified pre-owned, also called CPO.
In order to make a fully-informed choice, you first need to understand the nuances between the three categories. Here’s how each category is typically defined:
A new car is a vehicle that has never been sold. It can only be sold by a dealer with a franchise license for that brand.
A used car has been sold at least once. It can be sold by a dealer with a franchise for that brand, by a new car dealer with a franchise for another brand, by a dealer that only sells used cars or by an individual.
A certified pre-owned car is a used car that has undergone a thorough certification process by a franchised dealer and meets certain criteria by the manufacturer for age, mileage, and condition.
As with any product, the latest version commands a premium. Are you willing to pay a higher price to have a vehicle that boasts the most up-to-the-minute amenities, technology, and features? Or are you content to be a bit behind the times if it saves you some cash and bolsters your bottom line? The following factors may help you decide.
Each year, cars get new tech enhancements. In the last few years, automakers have started adding everything from data services and Wi-Fi, to backup cameras and onboard systems that integrate with the apps on your phone. Most of these are “nice to have,” rather than necessary, but certain features — such as a backup camera — might be helpful enough for some drivers to make purchasing a new vehicle worthwhile. Before making your decision, it’s worth also exploring if there are gadgets you can purchase separately that will accomplish your goals for less money.
In addition to flashy tech enhancements and design updates, new cars often receive new safety features. These updates can be minor, and may not be advertised. If you’re leaning towards a used or CPO vehicle, it’s worth doing some research to confirm there haven’t been any significant safety improvements since the model you’re considering.
Warranties will vary quite a bit between the three categories. New cars typically come with a bumper-to-bumper warranty that protects buyers for five years or 60,000 miles, usually whichever comes first. Most automakers also offer a warranty on CPO cars, though they are usually much more limited, usually only covering the first year or 12,000 miles. A used car, meanwhile, is only covered if it is new enough to still qualify for the manufacturer’s original warranty — so be sure to take the age of the vehicle into consideration and its warranty status before you buy. There are also “extended warranties” sold by third parties that you can buy, but they’re really just insurance products that are designed to cover the cost of repairs for a flat fee deductible.
When it comes to used cars, you can’t be fully confident of whether the past owner or owners properly maintained the vehicle. Requesting maintenance records and ensuring the car passes state inspection are good places to start, but they don’t guarantee that you’re seeing the full picture, or that the car won’t suffer from poor maintenance-related issues later on. Purchasing a new car eliminates these concerns, but, once again, you pay a premium for that peace of mind. If maintenance concerns are the only thing keeping you from choosing a used car, a CPO might offer a good balance: CPO programs typically only include vehicles that had all of their services performed on time, at a franchised dealer — so you can be fairly certain that you’re getting a car that’s in top shape. Some CPO programs also include free roadside assistance or free maintenance, which can alleviate concerns of what you’ll do in the event that an issue does arise.
So do you want all these latest bells and whistles, an ironclad warranty, and complete knowledge of your car’s maintenance history? Or are you willing to make a few trade-offs to cut down the up-front costs on a car that has been around the proverbial block a time or two?
It all comes down to gauging your desire to save money and your willingness to accept some risk. This, of course, is not a black and white proposition — if you’d like to split the difference between the premium cost of a new car and the uncertainty of a used, purchasing a CPO car can, for a couple thousand dollars more than a comparable used car without certification, offer benefits of both.
Did you find this article helpful? We have even more pro tips and advice all around buying a new car. From the best way to find deals to what you need to bring with you to the dealership, here’s what you need to know about buying your dream car.
This article is for informational purposes only and includes information widely available through different sources.