Determining the Value of a Used Vehicle
By: Dave Guttenberg (Owner of Automotive Imports)
It’s no secret. There is an overwhelming amount of information–much of it conflicting–about the real value of a “Certified Pre-Owned” vehicle. To best understand all the factors, the first, and most important, thing to identify is whether or not the vehicle is still inside its Original Manufacturer’s Warranty. A list below shows all of the new vehicle warranties.
When a vehicle is still covered under the new vehicle warranty, any mechanical repairs or defects must be repaired at no charge by the new vehicle dealer. This coverage extends to not only the first owner, but any successors during this covered period.
What is not covered under the new vehicle warranty? Most manufacturers do not pay for routine maintenance like tires, brakes, and oil changes.
Know what you are getting!
Audi only adds one additional year of coverage, and this coverage may not be cancelled and it has a $150 dollar fee to transfer it. There is also an $85 dollar deductible and a considerable number of listed exclusions such as Navigation and other items, which if they fail, Audi considers ‘wear and tear.’ BMW’s CPO plan only adds one year. Mercedes offers 100k additional miles, but for only one additional year.
Certified Pre-Owned cars go through a huge inspection and they are suppose to be nicer than other cars available on the market, right? This is a big misconception. While the franchise dealership should strictly adhere to the inspection list, this does not always happen. There are a lot of good dealerships and there are a lot that place profit over reconditioning.
A good used car is just that, a good car. With the abundance of off-lease vehicles available, there are way more used vehicles than new-vehicle dealerships can sell in a timely manner. A diligent used car dealership will decipher and locate nice, well-maintained off-lease cars and can offer them at a far more competitive price than a new-vehicle dealership.
Extended warranty options on a used luxury car still inside the new vehicle warranty are plentiful too. There are many options for an extended warranties on used vehicle that afford the buyer far more flexibility and better coverage than a CPO (certified pre-owned vehicle). It is important to determine who the warranty company is and what the level of coverage is being offered.
Lastly, an extended warranty can be cancelled if you do not keep the vehicle the entire duration of your warranty contract, and you will get back a pro-rated amount of the unused contract–if it is for 5 years and you only keep the vehicle for 3, you get back 40%, giving you protection when you need it and equity when you don’t.