Unraveling the Mysteries of Pre-Owned and Used Cars

October 12th, 2018 by

Paint on pavement for new and used with arrows in each direction

One of the biggest hurdles a lot of people run into when they start going shopping for a car, truck, or SUV is the abundance of industry jargon and lingo used by sellers, dealerships, and car enthusiasts. Figuring out what all of these terms mean, and sometimes what they don’t mean, makes the car-buying process much easier and can save you time, money, and frustration. For example, pre-owned and used cars may seem like the same thing, and sometimes they are, but sometimes they aren’t.

The good news is that these terms are not as mysterious or deeply esoteric as they might seem at first. Sometimes, however, the differences between related things, like “pre-owned” and “certified pre-owned,” can be pretty subtle but very important. Understanding these kinds of terms will make shopping for a vehicle much easier, plus you’ll feel more confident when you talk to a salesperson – or discuss your purchase with your wife, husband, parents, mother-in-law, or pets!


New Cars, Trucks, and SUVs

So let’s start with the simplest and least-confusing possible term when describing a vehicle: “new.” This pretty much always means exactly what you would expect it to mean. The car has come directly from the manufacturer to the dealership and is now being sold to the public. The prices on these cars are usually the highest, because they’re brand new, but they tend to also have the most options for available features and trim choices.

Any vehicle that has ever been previously sold to someone or used commercially should never be labeled as “new.” Sometimes a car or truck might be used by employees at a dealership for a while, and then put back onto the lot to be sold as new, since it was never technically sold before. This sort of practice is unacceptable, however, and reputable dealerships always take care of their products to ensure their customers receive a new vehicle.


Used Cars, Trucks, and SUVs

The traditional term for vehicles that had already been sold, and someone was reselling, was to refer to them as “used cars.” This makes sense, since the vehicle has been used by someone else and is now being sold again. You’re likely to see the term “used” when looking at pages in a newspaper or car-buying publication, as well as at some dealerships.

It’s important to realize, however, that not all used cars, trucks, and SUVs are equal. When considering a used car, look at the mileage on the vehicle and find a vehicle history report through one of several services available. Just remember that vehicle history reports only include information on them when someone, usually the previous owner who is now trying to sell the used car, actually reported it in one way or another. A negative history report is almost always a sign you should walk away, but a positive report does not replace having a used car looked at by a professional mechanic to ensure it is in good shape.

You should be particularly careful when looking at used cars sold by private sellers, typically the previous owner of a vehicle. Buying from a private seller can save you money, but you have no options for a warranty on the vehicle and little recourse if the car turns out to be a lemon. Always have a professional mechanic give a used car from a private seller a once-over before making a purchase, to be sure there aren’t serious, potentially expensive issues you don’t see.

Used cars dealer parking lot

Pre-Owned vs. Used

So now the big question: what’s the difference between pre-owned and used cars? Nothing really. The term “pre-owned” is generally just preferred, particularly by dealerships, because it sounds a lot nicer than the word “used.” You’ll still see dealerships, and hear salespeople, use the term “used,” even though their advertising mostly says “pre-owned.”

In general, these two words are effectively interchangeable, so don’t feel like you need to look for one over the other. If you hear a salesperson say a car is “gently pre-owned,” that just means it’s used, and hopefully that it was not driven very much – it usually means the car has low mileage on it. Pre-owned and used cars are less expensive at dealerships than brand new ones, sometimes significantly less expensive even when they are only a year old, but be sure to look carefully at any warranty information and the Buyer’s Guide on the vehicle.


Certified Pre-Owned

One thing that is very important to clarify, however, is that there is another term you will often see that is actually quite different from “used,” and that’s “Certified Pre-Owned.” A Certified Pre-Owned, or CPO, vehicle is one that has been sold before to someone else, so they are used, but then they are bought back by the manufacturer or a dealership. That is an important distinction to look for as well, whether the CPO has been certified by the manufacturer or the dealership you are at, as that can make a difference.

A manufacturer CPO car has been purchased back by the manufacturer of the vehicle, and then thoroughly inspected and worked on as necessary. The manufacturer then sends it back to a dealership for sale. Manufacturer CPO vehicles have a warranty and backing from the manufacturer itself, which means you usually get the best warranty possible for used cars and you know that it has been very well looked at and maintained before being made available. This is a great hybrid between a new and used car.

Dealership CPO vehicles have been purchased back by a dealership, rather than the manufacturer, inspected there and then put out for sale. This still gives a better degree of buyer confidence than buying a used car from a private seller; however, the quality of inspections can vary from dealership to dealership. Warranties for dealership CPO vehicles usually aren’t quite as extensive as for cars that are backed by the original manufacturer.


The Takeaway

For many people, the prospect of buying a car or truck, of going to a dealership, talking to a salesperson, and looking through a sea of vehicles can seem overwhelming. That’s perfectly understandable, and the car-buying experience has often been less than ideal at a lot of dealerships in the past. But with the information available on the internet, and many dealerships shifting to a much more customer-friendly approach to sales, the experience of buying a car doesn’t need to be a stressful one. The more you know, the better equipped you will be when you walk onto a lot or start browsing on a website.

When all is said and done, there are a few main points to take away from this and keep in mind while shopping for a car.

  • New cars are the most expensive, but you know they are fresh from the manufacturer and you typically have the most options and the most extensive warranty on them.
  • Used and pre-owned vehicles are less expensive, but you have fewer options available since they are mostly sold as-is, and warranties can vary greatly or not be offered at all.
  • Certified Pre-Owned vehicles give you a “middle way” that offers the value of a used car, with buyer confidence and a solid warranty typically found only with a new car.

Now that you know what you’re looking at, you can confidently choose the right car, truck, or SUV for you.

Posted in Used Cars