With the rise in popularity of certified used or "certified pre-owned" vehicles, many used car ads seem to tout the "certified" name without really living up to the promise of a car that is backed by the manufacturer with an impressive warranty and top-notch dealership experience. One typical scenario is that a used car dealer will advertise a car as "certified" and then sell the customer an extended warranty at an additional cost.
There's nothing really wrong with that, but it is important to point out that a customer who buys an extended warranty is not buying a true certified pre-owned vehicle. Certified pre-owned vehicles must pass a rigorous inspection and meet strict limits in terms of mileage and condition. On the other hand, an extended or aftermarket warranty can be purchased for virtually any car. Buying a certified pre-owned car can seriously lessen the risk inherent in buying a used car.
Here are some things to keep in mind when considering purchasing an extended service contract:
- To what extent is your vehicle already under warranty, and is this coverage in sync with how long you anticipate owning it?
- What's the reliability record of the model you're purchasing?
- Who is behind the warranty that you're considering?
- Is there a deductible?
- What exactly is covered? Does the contract cover breakdown as well as wear and tear?
- Is a cash layout required for repairs?
- Out-of-town expenses.
Purchasing an extended service contract is not the same thing as a certified pre-owned vehicle. Certified pre-owned cars must pass inspections and meet mileage limits, whereas an extended service contract can be purchased at an additional cost for virtually any vehicle regardless of condition or mileage.
Also, take into account the recent demise of some extended service contract providers, and it's easy to see why buying a certified used car instead of a regular used car makes a lot of financial sense.
Source: Edmunds.com
