Is it possible to own a new car that has several thousand miles on the odometer? The answer is yes, if the “new” car you bought was formerly a dealership demo car.
Demo cars represent vehicles that one or more of a dealership’s employees has driven for personal use or the dealer used the car for customer test drives. Cars driven for personal use by dealership employees typically have between 2,000 and 6,000 miles on the odometer. Test driven demo cars do not have as much wear and tear, as dealers use numerous vehicles for test drives and the distances traveled rarely exceed 10 miles per test drive.
Although demo cars have a little wear and tear, the vehicles are considered to be new. The reason for the “new” designation is that demo cars have not yet been registered.
Most dealership offer demo cars to customers, but the process for buying the unique vehicle is a bit different than shopping for a new car sitting on a dealer’s lot.
Checklist for Buying a Demo Car
Many consumers are motivated to buy a demonstrator car because of the potential to save thousands of dollars. However, the timeless saying “Buyer beware” has special meaning for consumers who shop for demo vehicles.
Let’s review a few tips that make sure you ask the right questions to prevent paying more than a demo car is worth.
Vehicle History 101
Virtually every sales representative working for car dealerships understands you have more information than ever before to help you make the right car buying decision. A significant element of the car buying process involves knowing the history of every car under consideration. Vehicle history is especially important for demo cars, as even a short test drive can result in a fender bender that puts the wheel alignment out of whack. As the sales rep about the history of a demo car first, before obtaining a copy of the demo car’s history report from a credible source such as Carfax.
Play Car Doctor
You have heard the expression, “Kick the tires.” Despite what the dealer sales rep says, you need to perform a thorough examination of the demo car you are thinking of buying. Demo cars sit in tight spaces among other cars, which places demo cars at risk for receiving dents and scratches. However, a few minor bumps might be the least of your problems. A demo car left out night after night in bad weather conditions can experience performance issues, especially with the engine and transmission. Take the demo car for a test drive, as well as have a licensed mechanic perform a 100-point inspection.
The demo car is considered new, but we all know the true meaning of new is a vehicle with no miles added on the odometer. Compare the price quoted by the dealership sales representative and compare it to the price of an identical make and model that has never seen the light of day on a road or highway. Research the True Market Value (TMV) of the new car and then factor in any dealership rebates and incentives. You might discover that going truly new is your best car buying option.
How Much Warranty Coverage Remains
Let’s assume the demo car you like has traveled about 5,000 miles. You need to check the warranty to see how much coverage you have left. If the demo vehicle comes with a three-year, 36,000-mile warranty and the car has been in service for six months, you have 31,000 miles or two and a half years remaining on the warranty. You should ask the dealer sales rep to extend the warranty or lower the sticker price of the demo car.
Know How to Price the Demo
The automotive experts at Edmunds.com have devised a template for pricing demo vehicles. First, determine the TMV of an identical new car. Second, calculate price by subtracting rebates and discounts offered by the dealership and/or auto manufacturer. Finally, for every mile on the odometer, subtract 20 cents from the price of the demo vehicle. The 20 cents figure accounts for standard wear and tear, not the damage caused by accidents.
One more tip on how to buy a new car. Just because the dealership insists on a price for the demonstrator vehicle does not mean you cannot negotiate the price. Use the same negotiation strategies you use when you shop for a new or pre-owned vehicle.