New or Used Car? Choosing the Right Used Car For You-

Buying your next vehicle is not as simple as deciding between 'new' or 'used.'  Used vehicles, or as some would say - "pre-owned vehicles," come in a variety of choices: (1) program cars, (2) certified pre-owned, (3) traditional used vehicles, and (4) cash cars.

A 'Program Car' is a used vehicle that is the current model year.  It would be a used 2011 model vehicle in the 2011 model year.  These vehicles typically are from auto executives or rental fleets.  The advantages of purchasing one of these vehicles are: (1) you will save thousands as compared with purchasing the same vehicle brand new.  The price should be 10% lower than the new car alternative; (2) the vehicle qualifies for all new car financing options - as a current model year, it's treated like a new vehicle in terms of interest rate and the amount of money loaned (referred to as the "advance"); (3) the vehicle would have a significant amount of its new car warranty remaining; (4) your neighbors and friends will think you bought a new vehicle - since it will look exactly the same as a new vehicle - only you will know what the odometer says and the fact that it was previously titled.

A 'Certified Pre-Owned' vehicle is a used vehicle that is "certified" by the dealer and receives additional benefits from the manufacturer.  Only certain vehicles qualify for this certification.  Generally, the vehicle must be newer than 5 years old with fewer than 60,000 miles, and have a clean vehicle history.  A franchised dealer must inspect the vehicle and certify that it has passed the manufacturer's test - hence the name "certified."  A Certified Pre-Owned vehicle can only be sold by the dealer representing the specific brand.  For instance, only a BMW dealer can sell a certified pre-owned BMW.  Once a vehicle is certified, it receives additional warranty coverage from the manufacturer.  These coverages typically include: (1) extending the powertrain warranty - which covers the engine, transmission, and drivetrain - upwards of 75,000 to 100,000 miles; (2) providing a short term comprehensive warranty from the manufacturer - a bumper to bumper warranty for a limited time, e.g. 3 - 12 months; (3) roadside assistance - in case you need a tow, a battery jump, you lock your keys in your car, or you run out of gas; and (4) eligibility for additional warranty upgrades and extensions which would not be available on a non-certifed vehicle.  In addition, the Certified Pre-Owned vehicle would also have low interest rate financing offers from the manufacturer's finance company.  Rates from 1.9% to 3.9% are typical.

A 'traditional' used vehicle is just that.  A used car which may, or may not, have any balance of the new car warranty remaining.  Typically, it is a vehicle that is 3-7 years old and has fewer than 150,000 miles. There are no special finance offerings.  These vehicles would qualify for extended warranties, which must be purchased separately.

A 'cash car' is an older used vehicle which typically costs less than $5,000.  The reason it is referred to as a 'Cash Car' is because a consumer cannot finance such a small balance through a dealership.  If financing is sought, it would have to come from an outside source, such as a Credit Union or Bank.  These vehicles will tend to be older with higher miles.  Warranties are generally not available for these vehicles and they would be sold "as is."

 Bottom line, if you're looking for a new car alternative for less money, consider the Program Car.  If you are looking for the least expensive used vehicle, consider the Cash Car.  If you are looking for moderately priced transportation which costs 1/2 the price of the new vehicle (or less), consider the Traditional Used car.  And if you're looking for a vehicle with the longest warranty and lowest interest rate, consider a Certified Pre-Owned vehicle.

Out of the 4 options which is better for you? There is no right or wrong answer.  It's up to you to figure out what the best car is for your particular situation.

Comment below on what factors influence the type of used car you by.  Why do you choose used over new? Is it credit Cost? Economics?  We want to know.  All comments are welcome.

		Program Cars		Certified Pre-Owned		Traditional Used		Cash Cars
Is the vehicle covered by a new car warranty?		Yes		Typically yes		Sometimes		No
Is the dealership's pre-inspection process standardized?		No		Yes		No		No
Is the vehicle sold "As Is"?		No		No		Sometimes		Yes
Maximum length of the powertrain warranty.		Limited to the new car warranty		Additional warranty is added to the new car warranty.  Typically extends new car warranty up to 100,000 miles		Limited to the new car warranty		Typically not available
Is the Comprehensive (Bumper to Bumper) warranty automatically extended?		No		Yes		No		No
Is Roadside Assistance Available?		Yes		Yes		No		No
Is the vehicle eligible for New Car financing rates?		Yes		Sometimes		No		No
Does the manufacturer offer low interest financing?		No		Yes		No		No
Is the warranty honored at all franchised dealerships?		Yes		Yes		Only if the consumer purchases a manufacturer extended warranty		No.  Vehicle is not eligible for manufacturer extended warranty.
Is the warranty transferrable?		Yes		Yes		Only if the vehicle has some of the new car warranty remaning.		No
Do you have a right to return or exchange the vehicle in the first few days?		No		Sometimes. Check with your dealer for details.		No		No