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How to buy certified
'Certified pre-owned' cars can be a great deal if you can negotiate the right price.
January 4, 2005: 11:06 AM EST
By Peter Valdes-Dapena, CNN/Money staff writer

NEW YORK (CNN/Money) - "Certified pre-owned" sounds like a load of marketing hooey, doesn't it?

"Pre-owned," after all, is a silly way to say "used." But, if you are in the market for a used car, manufacturer certification programs can offer some real value. At the very least, they promise an easier shopping experience than digging through the classifieds.

The basics

Certified used cars are sold by new car dealers. Generally, each dealer will sell certified used cars of the same make that the dealership sells as new. (To buy a certified pre-owned Lexus, you would go to a Lexus dealer, for example.)

To be certified, manufacturers require that a used car meet certain criteria. It usually must be relatively new and not have been driven more than a certain number of miles. It must be in cosmetically good shape and it will have to undergo a detailed mechanical inspection.

A certified car will also get an additional warranty. The terms of the warranty will, of course, vary with each manufacturer.

Shopping used vs. certified

Say you're looking for a used Toyota Camry. Ordinarily, you would search advertisements for cars in your area and, when you've found some potential candidates, you'd go and inspect each one to make sure it's in good shape. Then, if it looks fundamentally sound, you'd ideally hire an independent mechanic to give it a thorough going over.

With certified cars, you can concentrate on finding the car you need with the features you want at the best price, just as you would if you were shopping for a new car. Certification means the car has already been thoroughly expected. Yes, the mechanic that inspected the car was in the employ of the very dealership that's selling it to you, which certainly seems like an enormous conflict of interest.

But the extended warranty term, in addition to providing for repairs on covered parts and systems, also provides an incentive for the inspection to be done properly.

If you decide to buy a certified used car, the first thing you need to do is narrow down the field of choices. Decide which cars fit your needs and your budget, just as you would when shopping for any car.

When you're comparing cars, make sure to check data on their general reliability. Inspections and warranties are good, but buying a reliable model is still your best defense against problems.

Consumer Reports and IntelliChoice offer information on reliability and maintenance costs. There are often differences, not just between one car and another, but between one model year and another, so be specific.

Then make sure that the brands you've chosen have certification programs. Most do, but not all.

Next, compare the terms of the different certification programs. The major auto research Web sites have information on the different programs. IntelliChoice even does an annual ranking so you can see the manufacturers that have the most comprehensive programs.

The most important thing to look at when assessing certification programs is the warranty. You want one that will extend long beyond any still-remaining new-car warranty and that covers a lot of potential problem areas. Look for bumper-to-bumper coverage.

Don't put too much emphasis on the number of "points" on the car that are inspected, advises Charlie Vogelheim, executive editor of the Kelley Blue Book. When a manufacturer says its certified used cars get a "121-point inspection," that means that 121 different parts of the car are inspected.

The number of points inspected can vary depending on how the manufacturer defines a "point." Are the brakes one point? Or are the right front brakes one point? Or are the pads on the right front brakes a point?

Unfortunately, the manufacturers with the best used car certification programs aren't always the ones that make the most reliable cars. For example, Volkswagen has a top-ranked used car certification program, according to IntelliChoice, but Volkswagen also has a poor record for long-term reliability, according to surveys.

What you'd ideally like is a good certification program along with a good history for reliability. Even the best inspection can't uncover every potential problem.

Once you're at the dealership discussing a specific car, ask to see the inspection report for that car, advises Philip Reed, senior consumer advice editor at Edmunds.com. If the salesman hesitates to produce the report, go elsewhere.

Getting the right price

As with any used or new car, the price of a certified car is negotiable.

Arriving at a target price should also be easier than it would be for an ordinary used car because you can assume that the condition of a certified car is top-notch.

The automotive information site Edmunds.com offers "True Market Value" (TMV) for certified cars. These prices are based on actual selling prices of certified used cars. Edmund's TMV prices are provided only for base model cars, however, so you can't get certified TMV prices for a cars equipped with various options as you can with new cars.

General used car values, such as those provided by Edmunds.com, Kelley Blue Book's KBB.com and the National Automobile Dealer Association's Nadaguide.com, can provide a useful baseline for deciding on your target price.

Compared with a non-certified car in excellent condition, you should expect to pay about $500 to $800 more for a certified car price, depending on the brand's reputation for reliability.

If you are looking to KBB.com or Nadaguide.com for the expected retail price of a used car, remember that those sites show you the typical dealer asking price, which is not the price you would ultimately want to pay.

"That number that we're showing is really the high end," said Charlie Vogelheim, executive editor of the Kelley Blue Book.

Instead, look at KBB.com's "private party" value, suggests Vogelheim. That's the price that you would expect to pay if you were buying the car directly from its original owner rather than a dealership. Add about $500 and use that as your starting point for negotiation.

As with any negotiation, competition will get you the best price. Try to get price quotes from more than one dealer and let them know you're shopping around.  Top of page




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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. Disclaimer. Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.