The Pros and Cons of Buying a Demo Car
Thinking about buying a demo car? Learn all the advantages and disadvantages before you buy.
Are Demo Cars Worth the Discount?
Buying a demo car can be an attractive option if you’re looking for a new car but don’t want to spend too much money.
Demo cars are used by dealership staff or for customer test drives and usually cost less than brand-new cars. However, they still offer many of the benefits of a new car. Like any big decision, it’s important to consider both the advantages and disadvantages.
Key Takeaways
- Cost Savings: Demo cars are more affordable than new models, offering higher specs for less money.
- Mileage Concerns: They have higher mileage and potential wear from varied use.
- Restrictions: Options and warranty coverage are more limited than with new cars.
This guide thoroughly examines the pros and cons of buying a demo car. It helps you understand the savings and risks involved in deciding if it’s the right choice for you.
Car Buying Tip: If you’re looking for a demo car, you may have noticed that a reasonable price can be difficult in today’s market. Many car buyers end up paying more than the suggested retail price. But don’t worry! You can still get a great deal by requesting a free car quote to compare dealer prices in your area.
What is a Demo Car?
A demo car, short for “demonstration car,” is a vehicle used by car dealerships to show off the features and capabilities of a new model to potential customers. These cars are often driven by dealership staff or used for customer test drives. As they are lightly used, demo cars usually have some mileage but significantly less than a typical used car. The dealership maintains them to ensure they remain in excellent condition to appeal to buyers. When demo cars are sold, they are often priced lower than brand-new models, yet they come with many of the same benefits, such as part of the original manufacturer’s warranty still in effect.
What is the Mileage Limitation for a Demo Vehicle?
The mileage limit for a demo car typically varies by dealership and the specific policies they follow. However, a common standard is that a demo car should have relatively low mileage to be still considered desirable.
Generally, it’s accepted that a demo car should have no more than 5,000 miles on the odometer. This range ensures that the vehicle has been used enough to demonstrate its capabilities without excessive wear and tear, maintaining its value and appeal to potential buyers.
Some may argue that a demo car, although used, remains in perfect condition and retains coverage under the new car warranty. However, depending on the specific demo car and the dealership, you can sometimes secure a discount of up to $2,500–$5,000 off the car’s manufacturer’s suggested retail price.
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Benefits of Opting for a Dealer Demo
When you choose a demo car, you gain significant advantages such as cost savings, slower depreciation, and access to high-end features. Dealerships price these cars lower than new models because they have only been lightly used for demonstrations.
Despite their usage, they suffer less from rapid depreciation and often come with the same advanced features and original manufacturer’s warranty, delivering luxury and security for less.
1. Affordability and Value
One of the most significant advantages of choosing a demo car is the potential cost savings for consumers buying a car on a budget.
These vehicles are typically sold at a lower price than their brand-new counterparts because they have accumulated some miles on the odometer while being used for test drives or driven by dealership staff.
The price reduction can make these cars an excellent value proposition, as they often include the same features, accessories, and warranties that come with new models.
2. Higher Spec Models
Dealerships frequently select the most well-equipped models for demonstrations to potential customers. This strategy ensures that demo cars come equipped with better features and upgrades that might be cost-prohibitive in a new car.
Sales management deliberately picks models with higher-end infotainment systems, advanced safety features, and premium interior materials.
Consequently, these cars provide a more luxurious driving experience at a lower price, showcasing the dealership’s best offers.
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3. Depreciation Benefits
When you purchase a new car, it depreciates when you drive it off the lot—often dropping in value by 20% to 30% in the first year alone. Even though demo vehicles are sold as new cars, they are commonly purchased at a more significant discount. Hence, the depreciation rate is also lower, meaning less financial depreciation for the new owner. This slower vehicle depreciation rate can make a demo car a wiser investment.
4. Existing Warranty
Most demo cars still carry the original manufacturer’s warranty, ensuring that buyers are protected from any major repairs or defects that could emerge. This is a significant advantage, providing peace of mind similar to purchasing a new car but at a more affordable price.
You still have the option to purchase an extended auto warranty for added protection when buying a demo vehicle.
Drawbacks of Buying a Demo Car
Buying a demo car often means higher mileage and potential early wear. Without customization, choices are limited to dealership stock, and warranties offer less coverage due to earlier start dates.
1. Mileage and Wear
While other customers do not own demo cars, they have been driven. This means they will have higher mileage than a brand-new car, which could range from a few hundred to several thousand miles. Higher mileage can affect the vehicle’s longevity and might lead to earlier-than-expected maintenance and repair costs.
2. Limited Selection
When shopping for a demo car, choices are typically limited to what is available at the dealership. Unlike new cars, where you can customize features and choose from a broader array of colors and specifications, with demo cars, what you see is what you get. This can be a significant disadvantage for buyers looking for specific features or color combinations.
4. Shorter Remaining Warranty
While it is true that demo cars come with the remainder of the manufacturer’s warranty, the warranty period might be significantly reduced by the time the vehicle is sold. This means less coverage time compared to buying new, which could be a concern for those looking for long-term security.
Is it Worth Buying a Demo?
Buying a demo car can be a good deal as they are often less expensive than new models but still include high-end features and minimal wear. However, they have been used for test drives with varying degrees of wear and typically carry higher mileage.
Additionally, their warranty coverage starts from the initial use, not the purchase date. A demo car can be valuable if the price reflects these factors and you’re confident in the car’s condition. Always check the vehicle thoroughly and review its history before deciding.
Demo Car FAQs
What is a demo car?
A demo car is used by dealership staff or for customer test drives. It is typically well-maintained and has low to moderate mileage.
Are demo cars cheaper?
Yes, demo cars are usually sold at a lower price than brand-new cars because they have been driven and may have some mileage on them.
Can I negotiate the price of a demo car?
You can and should negotiate the price of a demo car, just as you would with any used or new vehicle purchase.
Can I return a demo car after purchase?
You cannot return a demo car after purchase unless the dealership explicitly offers a return policy or you encounter a covered issue under the warranty or consumer protection laws.
What should I check before buying a demo car?
Inspect the car thoroughly for signs of wear and tear, check its service history, and ensure that it has a satisfactory warranty.
Final Thoughts: The Realities of Buying a Demo
In summary, while the allure of savings and immediate availability might draw you towards purchasing a demo car, it’s crucial to consider the potential downsides. The mileage, limited selection, possible hidden issues, and shorter warranty period can impact your overall satisfaction and the practical benefits of buying a demo.
Like any vehicle purchase, doing your homework, conducting a thorough inspection, and considering your long-term vehicle needs will help you make the best decision.
About the author
My name is Carlton Wolf, and I’ve been in the car business since 1994, both retail and wholesale. I created the Auto Cheat Sheet to better educate buyers about the deceptive sales practices many dealerships use nationwide. Please understand that not all car dealers are dishonest. However, you never know who you’ll be dealing with, though. I’m willing to share my knowledge and experience with anyone who listens. Keep in mind that I’m a car guy, not a writer.
