or years, used cars were the Rodney Dangerfield of the automotive business: They got no respect. Burdened with the reputation of substandard merchandise and fast-talking salespeople, the used-car market played second fiddle to the gleaming, glistening new-car trade.
No longer. Thanks to certification programs, used vehicles now carry an assurance of reliability that customers craved in years past. Manufacturers, individual dealers, even auctions guarantee that the used vehicle you purchase today has passed a rigorous inspection process.
However, don't forgo your own inspection if you decide to purchase a certified used vehicle. Certification doesn't always guarantee a car's pedigree or justify its higher price tag. By reviewing the details of a vehicle's certification program and using a critical eye, you can make sure the vehicle is worth the extra money and worthy of your own seal of approval.
|Used cars now
outsell new cars at
|Used is in
With the average price for a new car hovering around $20,000 and a glut of off-lease vehicles on the used market, Americans are buying used these days. In a survey by The Dohring Co., an automotive retailing research firm based in Glendale, Calif., 62% of respondents said they'd rather spend $15,000 on a higher-end two- to three-year-old vehicle that's under warranty than on a brand-new vehicle.
As used-car sales have outpaced new-car sales at franchise dealerships, dealers have found that today's used-car buyers demand more from their purchase and their shopping experience. "Consumers want to be more educated," says Scott Fredericks, director of consumer marketing for Carfax, a vehicle history service based in Fairfax, Va. "Consumers are demanding more information before they go out and make a $10,000 or $20,000 used-car purchase."
Enter used-car certification programs. Initially championed only by the luxury auto manufacturers, certification programs have become the darling of the entire automotive industry. Almost every auto manufacturer now offers its own version of certification.
Consumers are responding. A survey by The Dohring Co. revealed that 28% of consumers would rather shop at a dealer offering factory-backed certification.
|Setting the standards
What's in a certification program? While the specifics vary among manufacturers, most programs share these traits:
|You can pay between
$500 and $2,000
more for a certified
|Paying a price
Certification comes at a price. Dealers pay factory-trained technicians to examine the vehicles inside and out. Dealers must pay for replacement parts. And, often, dealers pay a per-car or an annual fee to the manufacturer to participate in the program. All told, dealers plow an extra $400 or more into a certified car.
As a result, you'll pay more out of your pocket. According to Patricia Erney, managing editor of the National Automobile Dealers Association (NADA), McLean, Va., price guides, consumers pay from $500 to $1,200 more for most certified used cars than for similar noncertified cars. If you're buying a luxury make, such as Infiniti, BMW, or Mercedes, expect to pay $1,500 to $2,000 more.
|What's in a name?
Certification isn't the property of manufacturers alone. Individual dealers across the country--both franchise and independent--offer their own certification programs. The National Independent Auto Dealers Association (NIADA) in Arlington, Texas, has introduced a certification program that its members can join. Even Manheim Auctions has created its own program. "Everyone out there is hawking a certification program," says Fredericks.
Therein lies the problem. Because the term "certified" isn't copyrighted, certification programs can have widely varying standards and different implications for the consumer. "Relying on certification alone could be a dangerous thing," says John Creel, an investigator with the Montgomery County (Md.) Division of Consumer Affairs. "A certified car should be at a higher level of quality than the average used car. But that still should not forgive the responsibility of the prospective buyer to have the car checked out by a mechanic and to review the certification information."
|Inspecting the goods
To ensure certification lives up to its promise, ask the dealer for a copy of the inspection checklist. Inspections should cover vital parts and functions: brakes, steering, suspension, transmission, electrical system, air conditioning, and heating systems. If the list is padded with individual checkpoints for each ashtray, cup holder, and window, be wary.
Ask to see the mechanic's comment sheet from the inspection. "The mechanic has to check off each of those items and should make comments as necessary to say what was repaired," Fredericks says. "You'll have some record of the process that took place on the car." Also ask how long the inspection took. "If they're to inspect all the stuff listed on the checklist, it can't be done in a half-hour or 45 minutes," Creel says. Next, find out exactly what the extended warranty covers and what recourse you have if a component passed in the inspection proves faulty. "Get all promises in writing," says Creel. "Make absolutely sure there is a clear, concise understanding of what is covered and what is not covered. The certification process should provide for remedies if a problem arises in an area that is supposedly checked."
Don't be afraid to play detective. Take the vehicle to your own mechanic before purchasing. Is the vehicle in as good a condition as it should be to earn certification? Does everything jibe with the inspection checklist? Ask the mechanic to check for any recalls or technical service bulletins issued for that make and model.
Read up on the vehicle. Check out the annual auto issue of Consumer Reports. Browse automotive Web sites. Look up the car's value in NADA's price guides, Kelley Blue Book, or Edmund's publications.
You also might consider purchasing a Carfax vehicle history report. Using the 17-character VIN (vehicle identification number) found on a vehicle's dashboard, Carfax can generate a detailed history and background check for almost any registered used car or truck. You can learn whether the vehicle has been totaled, salvaged, or returned as a "lemon." The report also lists previous odometer readings to help detect potential rollbacks. "The report can reduce your risk when buying a used vehicle," Fredericks says.
Members of participating credit unions are eligible for a discount on Carfax reports. Ask your credit union representative for more details. The Web site for members to order a discounted Carfax report is: www.carfax4cu.com. The e-mail report costs $11.25. Or members can call 888-888-1615. A phone report costs $18.
As you contemplate your purchase, know that a few other factors are working in your favor. According to NADA, used-car prices overall are declining. That could help take the edge off the extra expense of certification.
Also in your favor, financing that used car is easy at the credit union, with very competitive loan rates and fast loan approval.
And, J.D. Power & Associates estimates that today's two- to four-year-old car, if well-cared for, will last longer, be more reliable, and be cheaper to maintain than a new car of 10 years ago. Because most certified cars fall in that age range, you can expect your purchase to last longer.
Finally, remember that the certification process can make you a savvier shopper. "Just as the Internet allows consumers to shop more effectively, certification allows them to have some level of protection and information before they make a decision," says Fredericks. "They can become smarter consumers through that process."
| Used-car prices
overall are declining.
|Research on the Web
Reports from Edmund's Publications Corp. and Kelley Blue Book provide used-car values. Both companies provide free price guides on the Internet. Be prepared to give the model and year, condition of the vehicle, equipment, and your zip code.
|©1998 Credit Union National Association, Inc.|