Are Certified Cars Worth the Money?

I thought this article was a good follow-up to our discussion on when it's the right time to buy a new car. In this piece, Bankrate talks about certified cars as a way to get a quality used car that you can be fairly sure will last you a good, long time. (For those of you who don't know, to become "certified", a car is brought up to the manufacturer's standard for a used car and typically comes with an extended warranty.) But doing so comes at a price. Their summary:

The first thing a shopper will notice is that the certified vehicle will carry a significant premium over a similar vehicle that isn't certified.

For example, a 2005 Honda Accord LX sedan in outstanding condition with 20,000 miles would likely be listed by a dealer at about $16,000. If it's a certified vehicle, shoppers can expect to pay about $1,100 more for the same vehicle.

And what do you get for your $1,100, maybe not as much as you think if the extra warranty overlaps with the original one:

But the comprehensive 12,000-mile/12-month warranty may not be that valuable because it might overlap with what's left of the factory warranty on this hypothetical 20,000-mile Honda.

An alternative:

One option for the used car buyer is to save money by getting a noncertified vehicle and then buying a separate extended warranty.

But in the end, Bankrate does like certified cars:

In the final analysis, shoppers who are looking for a used car in a condition that comes as close as possible to the condition of a new vehicle likely will find the certified used vehicle to be the best deal. It offers value and a degree of peace of mind.

I'm interested in what you all think of certified cars. Are they worth the money? Anyone buy one (or refuse to buy one)?

Comments

[Laura]

I had gotten a certified used VW Passat a few years back and added a power train warranty (an extra $1,000). When I got in a wreck and the insurance company declared it a lost, I got the car paid off AND $2000 refund.

Look for a car that is in good to great condition, whether it is certified used or not and then compare prices.

[Ryan S]

I have never bought a certified used vehicle, but I have bought non-certified. I've bought 3 in my lifetime. The only problem I've ever had is that on one of them, the fuel pump died after 4 years, probably beyond what any certified used vehicle would have covered anyways. The fuel pump was probably my fault too since I used to always run the gas tank down almost to empty. Now I fill up as soon as I dip below 1/4 tank.

[Matt]

One advantage of the certified used cars is that they will tend to be best ones to begin with, because the dealer will have already selected them for how easy they are to bring it up to the manufacturer's standards.

That said, the quoted article makes a good point about the questionable value of the warranty. One thing you can try is to negotiate for the certified car you want, but get them to drop the warranty and its associated cost from the deal. Put that difference into savings, and more often than not, you'll be better off self-insuring against breakdowns.

To find cars of similar quality to the certified ones, look at dealers who don't normally sell the make. Get a used Toyota from a VW dealership, for instance. That way, even if it's one of those cream-of-the-crop trade-ins, they won't go through Toyota's certification process.

[Kevin]

I'm wary of "certified" cars just because it is the manufacturer or dealer certifying them, not an independent third party. What incentive do they really have to ensure these cars are better than a used car that isn't certified? To me, it's just another gimmick to raise the price.

[crossn81]

We bought a certified Civic a few years ago from a Honda dealer it was maybe a $1,000 more than a very similar Civic at a Chevy dealer.
I went with the certified one with a warranty because I knew that if anything went wrong the dealership could actually fix it and knew what specific items they were looking for in regards to wear and tear with their own cars. This year we had to get the struts replaced over a $800 proposition - Honda Care (their warranty) paid for the whole deal.
The only bad part about their warranty (and maybe all warranties) is that you have to use Honda parts and have regular maintenance at Honda's dealerships or the warranty can be voided.
So it is a balancing game of costs: is $5 - 10 every 3-5 months price difference in maintenance plus ~$50 a month for the warranty cheaper than potentially having to shell out $800+ on the spot for a repair?

[BenG]

Crossn81 -

This is illegal: "The only bad part about their warranty (and maybe all warranties) is that you have to use Honda parts and have regular maintenance at Honda's dealerships or the warranty can be voided."

Honda cannot legally require you to use Honda dealerships for regular/routine maintenance, nor can they require you to use Honda parts for maintenance. That flies directly in the face of the Magnuson-Moss Act.

As long as you are using parts and fluids that meet OEM specs, Honda cannot deny you warranty coverage (unless it was a third party part that actually caused the damage).

Sounds like your dealer sold you a bill of goods...

[Ryan S]

BenG,

That is standard language for vehicle warranties. It may be illegal, but it is in most every vehicle warranty contract out their.

[Mark B.]

It only costs a dealership about $500 to "certify" a used car. What I did was select a car I wanted, negotiated a price, and then asked the dealer if they would "certify" for me and I would pay the $500.

It worked great, I got a 75,000 mile warranty, full inspection, and my interest rate on the loan was lower because it was certified.

And when the transmission blew out at 50,000 miles it was covered under the extended warranty. Well worth the extra $500.

If you are looking for a certified used car, just remember, the price is negotiable, or just select a non-certified vehicle and ask them to certify it.

[BenG]

It hasn't been in any vehicle warranty of a car I've purchased. That would be a "Tie-In Sales Provision", which is blatantly illegal. The only thing a manufacturer can do is *recommend* service at their dealerships. They cannot require it, nor can they deny warranty service for having work performed elsewhere.

I'd suggest actually reading the fine print of your warranty, I'm sure you'll find language similar to that. If you have a car warranty contract that actually requires all service and parts from the manufacturer, I'd love to see it. You'd have a great class action lawsuit available.

[dwr]

Who buys a certified vehicle and then only gets a 12 month extended warranty? When I bought my certified used car it came with an extended 7 (or 8 can't remember exactly) year, 100,000 mile warranty.

[crossn81]

I'm not going to go try and find the exact wording but I know for sure that you have to be able to prove that you maintained the car to their specs for the warranty to be valid, I keep all my receipts from the dealership but I also know it gets logged into their computers and follows my car's history. Illegal or not it is a lot easier and this way you won't have to hassle with the warranty if an issue comes up - they have the records of everything and if the mechanic messes up - its their fault since he's a Honda certified mechanic etc.

I don't know, I'll keep that in mind for the future though... The warranty was sold to us by the finance guy and we bought the "certified" car for under the Kelly Blue Book Value so it all comes out in the end I guess.

[Tiggy]

On a slightly related note, my husband purchased a salvage vehicle 3 years ago. Salvage vehicles have been previously "totaled" by an insurance company due to a variety of reasons. This car had been in a flood, but only up to the seats, not anywhere in the engine compartment. We got it for half price off the kbb price. We had to take the seats out, pull the carpet up and squeeze the water out of the pad under the floor (picture I Love Lucy squishing the grapes with her feet.) Other than that the car has been great. Fortunately my husband is handy and did the carpet work himself. I recommend a salvage vehicle only if you can fix some stuff on your own without paying high labor costs to a garage.

[IP]

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