Edmunds: Now is time to shop for certified pre-owned vehicle

Used cars have historically been a smart alternative for those in need of transportation during an economic downturn. They don’t depreciate as much as new cars and are less likely to overburden a buyer with a large loan at a time of uncertainty.

Over the past four years, inventory of vehicles returned to dealerships after being leased has increased by 33%, according to Edmunds data. This stands in contrast to new car inventory, which has been constrained by the slow reopening of factories amid the coronavirus pandemic.

Many of these used vehicles, which are typically 2 to 3 years old, will be reconditioned by dealerships into certified pre-owned vehicles. These CPO vehicles present a choice opportunity for shoppers who can take advantage of record-low interest rates and greater savings than if they were to buy new.

In fact, the price gap between new and used vehicles has never been greater. On average it costs about $15,471 less to buy a 3-yearold used vehicle than a new one. For example, the average savings on a 3-year-old Honda Civic is $6,670, according to Edmunds data, while buying a 3-year-old Ford Explorer saves you $21,098 on average.

Why buy a CPO vehicle as opposed to any used vehicle? A CPO vehicle is typically newer and in better shape than other used vehicles on the dealership lot. It has been given a more thorough inspection and reconditioned if any items needed to be replaced. If the vehicle has any of its factory warranty remaining, that carries over and an additional one to two years of a limited warranty is provided as well. Finally, it comes with other benefits, such as roadside assistance or the ability to borrow a loaner vehicle if yours is in need of repairs.

In recent months, many automakers have made CPO vehicles a more appealing choice to encourage car shopping. In particular, they’ve offered deferred payments and interest rates between 0% and 3% on CPO vehicles for shoppers who qualify and finance through them.

Here are a few things you need to know to make a more educated decision as you search for a CPO vehicle.