You're on the dealer lot or website and come across an intriguing used car. It is the same model year as what's currently available new, yet it is being sold at a discount for thousands less than the MSRP of a new one. This used car could either be a demo, loaner or program car, which saw limited use in some dealer capacity and is now being sold as a used car. But are any of these vehicles actually a good deal?
Should I Buy A Demo Car
In some cases, a demo vehicle can be a good way to save some money on a nearly new car. But shoppers need to do extra research to make sure they know the vehicle's history and condition and verify whether the price is actually a good one.
Car dealerships use demo cars for test drives when popular new models are in short supply, explains Chris Cutright, a former car salesman. Often, the dealership's managers also use demo cars for commuting. However, dealers do not always register demo cars, so the vehicles may still be considered new, even with the added mileage. When their dealership duties are over, the cars go up for sale with between 1,000 and 3,000 miles on their odometers. Demo cars come either from the dealership's own inventory or an auction at which the used-car manager purchased them, Cutright says.
Demos shouldn't be confused with what are called "program" cars, which are driven by manufacturer representatives and then distributed to dealers to sell, with as many as 10,000 miles on the odometer.
"Buying or leasing a demo car can be a great deal if the price is right," says Dennis Rayfield, the former fleet manager for a Hollywood talent agency. He now works for Edmunds giving car-buying advice to consumers via the Live Advice service. In some cases, he purchased these cars for his clients to save money. In other cases, he bought demos because he couldn't find a car with the options and features a client wanted in the dealership's inventory.
Buying a demo car is a "potential" good opportunity, stresses Oren Weintraub, president of Authority Auto, a car-buying service in Sherman Oaks, California. But here's the key: Is the dealership willing to give you a good price? A demo car is not automatically a low-priced car, Weintraub says.
Cutright agrees. While demo cars offer the opportunity for a bargain, a smart shopper can often do just as well buying a new car. With manufacturer incentives, special leases and smart negotiating, "you don't have to mess around with things like buying a demo," he says.
Check the warranty date: Ask the salesperson to provide proof of the "in-service" date, which is when the warranty begins. The in-service date is usually the date when the buyer purchased the car. But the in-service date could be earlier if the dealership uses the car as a demo. Unless the dealer extends the car's warranty, the buyer misses out on what could be months of coverage. If the warranty has already started to run and the dealer isn't willing to extend it, ask for a lower purchase price.
Compare it to a certified pre-owned (CPO) vehicle: In most cases, though the demo is being sold as a late-model used car, it will not be considered a CPO vehicle. This distinction means that it will not have the benefits of a CPO, such as an extended warranty or complimentary maintenance. Honda's HondaTrue Certified+ is one of the first CPO programs to rectify this issue, offering an additional year of warranty coverage for loaner vehicles. Another thing to keep in mind is that if you go back a couple of model years, the CPO vehicle will usually be less expensive than the demo.
Do a new-car cost comparison: Get a price quote for the demo car from the dealer and then look up the cost of a comparable new car. Make sure you review the True Market Value (TMVÂ) price of the new car and include any incentives and rebates. Then ask yourself if you are really saving enough money on the demo car to justify the other factors such as the wear and tear, miles and shortened warranty.
Check the condition: Salespeople use demo cars for test drives, and the tight quarters of dealership car lots are notorious for producing dings and scrapes on cars. That's why it's important to check any demo car for damage. Ask the salesperson if the vehicle has had any bodywork or painting.
Cutright offers one more note of caution. Some salespeople might offer a demo car and make shoppers think they're getting an inside deal. But if you take the time to check pricing and run a comparison, you might just find out that the demo "isn't any less than a brand-new car they just got off the truck," he says.
However, you should know that while these cars may come with drool-worthy factory add-ons and low mileage, saving money with one is not guaranteed. So, how exactly is a demo car used, is it a good idea to buy one, and what demo-specific negotiation strategies might customers use?
A demo car is used for demonstration on a vehicle lot so customers can experience the model as they shop. Dealership representatives can also use these cars as sales tools, showing customers how different features look when gathered and affixed to a waxed, glossy car.
Actually, you may not automatically save lots of money by buying a demo car. The deal could depend on how well you negotiate because dealers may initially offer the car on display for the full sticker price.
Demo cars are typically sold at dealerships, so you'll want to call local dealerships and ask about their demo car inventories. They are also sold online and at in-person auctions, though many of these auctions may be for licensed car dealers only. Research car auctions near you, and see which allow the public to participate.
Demo cars are what dealerships use for test drives, or sometimes the dealership's management uses for commuting. They're not always registered, so they may still be considered new despite the mileage. Typically, demo cars are sold with less than 3,000 miles on them.
Part of the appeal of demo cars is the opportunity for a discount, so you want to ensure you are getting a good deal. Figure out the price for comparable new models. Ideally, aim for a discount of 25 to 40 cents per mile driven. For example, if the demo car has 3,000 miles, the discount should be between $750 and $1,200.
Whether or not a demo vehicle is a good deal depends, so you should take into consideration the total cost as well as any discounts or incentives. As with any car purchase, you can (and should) negotiate as well. Dealers are eager to move demo cars off the lot and maybe even more willing to negotiate. Since demos are already discounted, the negotiating may come more in the form of trade-in value or extras rather than the car price.
Buying a demo car can be to your benefit if it has the features and options you're looking for at an appealing discount. However, if you have to compromise heavily or the discount is negligible, you may be better off buying the brand-new vehicle of your choice.
Buying a demo car could save you a good chunk of money on a nearly new car, but keep in mind that the demo car has been driven. Always be sure to carefully examine the vehicle, get the history report, and hire a mechanic for a pre-purchase inspection.
Demo cars are not the same as certified pre-owned vehicles. CPOs have certain benefits, like extended warranties or complimentary maintenance, that demo cars won't have. However, demo cars may be eligible for the same incentives as brand new models and often have a good chunk of their original warranty left.
As with any vehicle purchase, you must carefully consider a demo car. While demo cars have some advantages that make them appealing, they also carry some risk and are not brand new. To determine if you should buy a demo car, carefully examine the discount you'd get and the vehicle's condition.
Demo cars are the vehicles dealerships use for customer test drives. Employees may also use them to commute. They're usually popular models in short supply that dealers often sell to interested buyers when inventory is low. Because demo cars typically have a few hundred to a few thousand miles on them, you may be able to purchase one for less than what you'd pay for a new version of the same car.
Did you know that dealerships have demonstrator cars and trucks that they often sell at lower prices than new cars? These demos can be a good deal, offering a lower price for a new vehicle. You just need to take a good look at it and weigh the pros and cons of your situation. If you are looking to get the most for your money, make sure to ask your dealer about their demonstrator cars and see if you can find a great buy.
There are some significant advantages to buying a demo car. Keep in mind that even though these might have up to 3,000 miles on them, they are considered new because the dealership never sold them. These vehicles should qualify for all rebates and special new-vehicle financing as well as the warranty. Demo vehicles are often sold at reduced prices, so it can be a good way to get into a new car for less money.
If you are considering applying for a loan for your demo car, you can get in touch with Finance One to find out how we may be able to help with finance solutions. Call one of our friendly team today to discuss your options.
Though a brutal driver, or certain brutal conditions (off-roading, motorsports use) can cause plenty of wear and damage in quick order, demos are typically driven by dealer staff who are expected to keep the vehicle in great shape, and use it only in approved situations.
The gist? Lasting damage or wear to a demo vehicle is possible, but arguably very unlikely. If any lasting damage were caused to the vehicle during its first few thousand kilometres of use, it would likely be apparent on your own test drive.
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