A certified pre-owned car is a used car offered by an authorised retailer after the mileage, age, and quality checks. Typically, used cars are sold by either private sellers (usually without certification) or professional dealerships (which may offer certified or non-certified options). Choosing between a dealership vs private seller can be a challenge if you are not clear on what the difference between the two is.
With the high depreciation of cars due to rising prices, buyers are prioritising certified pre-owned cars for better value. The choice between certified pre-owned vs used cars depends on the warranties, inspections, costs, financing, resale values, etc. In this blog, let’s explore what the right choice could be.
Buying a New vs a Certified Pre-Owned Car
Certified pre-owned (CPO) cars in India are used cars that typically undergo mileage, age, and quality checks conducted by OEM CPO programmes. These cars are well inspected, refurbished, and backed by warranty programmes run by OEMs or organised retailers.
Major Original Equipment Manufacturer (OEM) CPO programmes from Hyundai H-Promise, Maruti True Value, Mahindra FirstChoice, CarTrade, and CARS24 provide you with multi-point Pre-owned car inspection. For instance, Maruti’s 376 checks and Mahindra FirstChoice’s 140+ points process.
These cars are refurbished adequately with genuine parts and are available with an inspection report and assurance terms. This may make the CPO option more reliable than standard used cars.
While comparing pre-owned vs certified pre-owned cars, the difference lies in the added inspection, reliability benefits, and warranty that CPO vehicles provide over regular used cars.
New cars are relatively more expensive, and they come with factory warranties. A pre-owned car has a limited warranty, and is usually fairly priced.
Certified Pre-Owned Car vs Used Car
A used car is referred to as a non-certified, regular car sold by private sellers. It is cheaper than CPO cars, usually by 10-20%. It gives the wide availability and negotiation flexibility to buyers.
These purchases may carry certain risks, as these cars usually have incomplete service history, no formal inspection, possible odometer tampering, and hidden accident damage. Without structured checks or a warranty, the long-term reliability of these cars becomes uncertain, so you must consider an independent inspection.
Price Premium: What You Pay and What You Get
Buyers may review the price while buying used vs certified pre-owned cars. While certified pre-owned cars usually cost more, they ensure verified quality and help reduce future risks.
When comparing buying a new car vs a certified pre-owned, CPO vehicles provide used car reliability (comparable to a new car) at a low cost, and become a wise middle-ground choice for budget-friendly buyers. Some of the examples are as follows:
Note: The prices here are an estimate and can vary based on several factors such as city, state, and other market conditions.
The premium price of CPO comes with the certified pre-owned extended warranty options, refurbishment using OEM parts, multi-point inspections, and verified paperwork.
Inspection and Reliability: Matters More Than a Label
Inspection may matter more than the label, whether you are buying a certified pre-owned or used car. You should consider the essential mechanical checks like suspension wear, brake health, tyre condition, electrical systems, engine compression, oil leaks, transmission behaviour, and cooling function. These factors affect the car's depreciation and future repair expenses.
For instance, a car showing uneven tyre wear may indicate suspension issues. It can impact the resale value of the car as well.
Along with careful inspection, you should also complete the paperwork, check the full service history, Registration Certificate (RC) details, insurance renewals, No-Objection Certificate (NOC) (if required), and Pollution under Control (PUC). Also, check for odometer tampering to check the red flags of cars that include abnormally low mileage, mismatched service records, and gaps in ownership history.
It’s important to take a final test drive to check the clutch wear, vibrations, unusual sounds, smoke, and gearbox slips of the car before buying it. A complete inspection reduces the risks even when you buy a regular car from a private seller.
Warranty, After-sales, and Service Network
The benefits of buying the CPO cars for Indian buyers include manufacturer-backed warranties that extend beyond the original factory warranty. When considering purchase of certified pre-owned vs new, CPO cars may offer you meaningful value with manufacturer-backed quality at a lower price than a new model.
It means that you will get the additional protection against mechanical issues and ensure that the required repairs are covered in the warranty period. OEM CPO programmes may help you to reduce ownership risks by offering pre-owned warranty packages. For example, Hyundai H-Promise typically offers 1 year/20,000 km to buyers.
Related Reading: Learn the importance of car service records while buying a used car in our blog “Car Services Records: Why Are They Important & How Do They Increase Car Resale Value?”
Finance, Insurance, and Paperwork
Many financial institutions provide funding and insurance coverage on used cars. Some of the financing options are:
- OEM CPO Networks: You can check with the OEM CPO network and contact the lenders to get a loan. Most have the loan process for CPO vehicles integrated in the car sales process, the same as when you buy a new car.
- Organised car retailers: It may be easier for buyers to finance the pre-owned certified car in India through the OEM-backed dealerships and organised retailers, as they have the tie-ups with the banks and NBFCs.
- Private car loans: To get a loan for private used car purchases, you should submit stricter documentation, pay comparatively higher borrowing rates, and undergo additional vehicle verification.
To get insurance cover, buyers need to submit the inspection photos, update NCB, and revise policy details on the basis of the car's age and condition.
Next, you need to complete your RTO ownership transfer with the correct forms and fees and avoid future liability or legal issues upon resale.
How to Verify a ‘Certified’ Claim?
Buyers must verify the seller's certified tag instead of taking it at face value. Here is what you need to check and avoid red flags:
- Verify OEM CPO certification: You should check the official OEM programme page and request the certification number of the vehicle. You can also check the serial ID of the vehicle. Manufacturers like Hyundai allow buyers to check the H-Promise certification details via the portal.
- Check the marketplace CPO documentation: You must check the marketplace CPO documentation if you buy the car through organised marketplaces. Next, verify the UID listings on the platform from where you buy.
- Watch for red flags: Look at the red flags in CPO cars, like missing service-book stamps, mismatched odometer readings, before buying it. It’s better to avoid sellers who are unwilling to allow independent inspections or provide unclear warranty details. Always use the odometer tamper detection tools for verification, and then purchase the car.
Which Option Suits You?
The choice between a certified pre-owned or used car depends on your budget and priorities:
- If you want quality assurance with peace of mind and are ready to pay a premium price, then a certified pre-owned car is right for you.
- If you are comfortable with the complete research and inspection and have a tight budget, then a used car may suit you better.
Here is the quick comparison table on certified pre-owned vs used cars:
Final Thoughts on Certified Pre-Owned vs Used Cars
Both certified pre-owned and used cars have their own benefits. Certified pre-owned cars give you more peace of mind and reliability with complete inspection and warranties, but are usually higher priced in comparison to non-certified used cars. This means used cars are more affordable and provide you with a wide variety, but come with potential risks and extra expenses. By understanding the differences and focusing on your priorities, you can make informed decisions that align with your goals.
Looking for a used car loan for pre-owned cars? Explore the financing options available at Shriram Finance to drive your dream car home. For terms and interest rates, please visit our website.
FAQs
1. Why do certified pre-owned cars cost more than regular used cars?
Certified pre-owned cars cost more than regular used cars because the higher price includes rigorous multi-point inspection, extended certified pre-owned warranty, and reconditioning.
2. Are certified pre-owned cars worth the higher price compared to used cars?
Yes, the Certified Pre-Owned (CPO) cars are worth the higher price than used cars because they give you reliability and a limited warranty. Used cars are usually better for buyers who have tight budgets and are ready to face the risks.
3. Which is better for first-time buyers: used car vs certified pre-owned?
Certified pre-owned cars are suitable for first-time buyers since they come with a warranty, peace of mind, and a hassle-free buying experience.
4. Do certified pre-owned cars always come with a warranty?
Yes, certified pre-owned cars come with a warranty from the manufacturer. It is a major benefit of the OEM CPO program given to buyers.
5. Is financing easier to get for a certified pre-owned car than for a used car?
Yes, you may get financing on certified pre-owned cars, because it comes with a dealer-backed inspection and extended warranty and reduces risks for lenders.