Certified Pre-Owned Dealer Scam
In search of a way to increase used car sales and give customers piece-of-mind. Manufacturer's and car dealerships have come up with several different "Certified Used Car Programs."
The Certified Pre-Owned Used Car Scam can be an honest mistake made by dealership staff, or it can be intentional. Whatever it is, you should know how it works and how to protect yourself. A car dealer doesn't want to get stuck with a substandard vehicle on their lot anymore than you want to own one.
For a used car to become "certified" or "certified pre-owned," the vehicle must pass a certain inspection process. The certification standards may vary by manufacturer and each certifications criteria may be set by the manufacture or the dealership.
This section will tell you everything you ever wanted to know about the "Certified Pre-Owned Used Car Dealer Scam." This scam may also be known as the "Certified Used Car Scam" or "CPO Scam."
In this section:
What is a Certified Used Car Program?
Certified Pre-Owned Programs (CPO Programs) were created to get more consumers interested in buying used cars. Most manufacturers and several dealerships offer some kind of certified used car program.
For most vehicles to qualify as a "certified used" vehicle, the warranty provided must be backed by the original vehicle manufacturer. The manufacturer of the car is using its dealer's to inspect the vehicle, determine if it is worth certifying, and then offer coverage on the vehicle for a period of time beyond the original manufacturer's warranty.
Not all used cars will qualify for CPO programs, and manufacturer terms vary from one brand to the next, but any true certified pre-owned program will include at least a 100-point visual and mechanical inspection of the vehicle.
Normally a used car has to pass a certain inspection process to become a certified vehicle. This is to help make the buyer of the car feel at ease knowing the used vehicle is in good working order, and should be free from any previous major frame, flood, or fire damage (including accidents). Some manufacturers will even add additional protection and benefits if you buy a certified used car.
Benefits to buying a certified pre-owned vehicle:
- 3 to 12 month comprehensive warranty
- 100-point or more quality assurance inspection
- Roadside Assistance for up to 12 months
- 70 to 100k limited power train warranty
- Include a vehicle history report
- Special incentive financing with the dealer
The above benefits will all have mile limitations and/or "fine print." My advice is to read the fine print and make sure you're making a good buying decision.
Certified used vehicle programs offer consumers greater peace of mind, less risk, and allow the dealer to charge a little higher price for the car. Statistics show, used car buyers really like these programs and have made them very successful for the dealer.
Two Steps You Must Take Before Buying a Used Car!
1. Have the vehicle inspected by a certified used car mechanic.
2. Get a used vehicle history report on the vehicle you're buying.
Before going used car shopping, read my step-by-step used car buying guide to learn how to buy a used car, get the best deal and avoid car dealer scams.
How Does a Car Become Certified?
Most certified pre-owned vehicles have low mileage, are in "like-new" condition, have never been in an accident, and have a clean vehicle history report.
Each certified used car is driven and inspected in accordance to a checklist that may contain 100 or more points including but not limited to, engine and transmission, airbags, exhaust system, safety equipment, suspension, brakes, tires and wheels, doors, paint, hoses, engine belts, battery, lights, windows, interior, electrical system, and more.
CPO vehicles may also be offered with limited warranties, roadside assistance, vehicle return policies, and even special finance rates. These types of offers will vary depending on the manufacturer or the dealership.
Do Certified Pre-owned Cars Cost More?
The peace-of-mind that comes with buying a certified used car does have an added cost. All the added protection such as warranties and roadside assistance are not free.
Normally the added cost when buying a certified pre-owned vehicle would vary greatly depending on the dealership, manufacturer, vehicle, and program. The mark-up on a certified vehicle ranges anywhere between 5-10% more than a non-certified used car. This amount, in dollars, can be $500 on cheaper vehicles and up to $5,000 or more on higher-class luxury vehicles.
What to Look for in a Certified Program
Some independent car dealers may have a certified used car program also. Some of these dealerships will just put up banners, give their program a fancy name and advertise. Be aware the manufacturers do not normally back these types of programs or dealerships.
These CPO programs may not have the same high standards set and offer the same quality used car. Some of these independent dealers certified used car programs might be complete scams.
Certification programs are backed by manufactures that provide the dealership personnel with specialized training, set policies, inspection standards and warranties. Before you buy a certified used car from a dealer. Make sure to look for the inspection report, warranty and guarantee that should come with the vehicle.
What's Happening with Certified Cars?
Every day there are thousands of used cars bought and sold at auctions all over the country. Vehicles with previous damage are bought cheap by dealers, and are slipping through their certified inspection process.
Dealer's make mistakes when buying cars at auction, mechanics make mistakes when inspecting vehicles going through the process. Even though it may be an honest mistake, the uneducated consumer will be the one left driving the bad car.
Is a substandard car slipping through the certified process a mistake? It's too hard to prove otherwise. The best thing you can do to protect yourself is to NOT BUY ONE!
Even if a car is deemed a "Certified Used Car" by the dealer and becomes available for sale to the public. It's your responsibility to protect yourself from buying a re-built wreck. These vehicles may have been repaired or rebuilt from flood, fire or frame damage, the car may have been labeled a "lemon" in the past. Buying one of these cars will be very costly to you.
How to Avoid the Certified Pre-Owned Scam
- Ask to see the used car's CPO inspection checklist. This will show you any discrepancies repaired when the technician inspected the vehicle before the car was put on the lot for sale.
- Competition will get you the best price. Research and review used cars through online companies before visiting a car dealership. The companies we recommend for shopping and researching used cars online are Edmunds and CarsDirect.
- No matter who you buy a vehicle from you should always have the vehicle inspected by an independent certified mechanic before purchasing the vehicle. A mechanic can tell you if a used car has been in a previous accident in a matter of minutes. This should be done in conjunction with inspecting the vehicles used car history report.
- Do not rely on the car dealership to provide you with a vehicle history report on the car you're about to purchase. They're the ones trying to sell you the car.
- Before buying a used car or while shopping for used cars online, acquire a used car history report. If shopping online you can use the VIN to get a report and save yourself a trip if it comes back as a bad vehicle. The company we recommend is AutoCheck®, they provide you with unlimited reports for 30 days. If you'd like to know more about used car vehicle history reports and all the information they contain. Read my detailed guide on vehicle history reports.
- Never sign an "As-Is-Where-Is, No Warranty" agreement when buying a used car from a dealership without some kind of added protection. If you must sign an "As-Is-Where-Is, No Warranty" make absolutely sure you have the vehicle independently inspected by a certified mechanic, and you have personally acquired a used car history report on the vehicle you're looking to buy.
Now that you know how to recognize and avoid the "Certified Pre-Owned Scam," to familiarize yourself with other new and used car dealer scams committed during the car buying process.
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My Recommended Sites for Used Car Shopping
Edmunds and CarsDirect are the quickest way to check used car prices in your local area. These online sites will provide you with free, no-obligation quotes and the prices you're quoted are normally very good. You can also use this free information to negotiate a better price between dealers.
Share Your Tips - If you have any additional information about this car buying scam that will help other car buyers save money. Please tell us about it in the comments below, so we can share it with everyone.