Are Demos for Dummies?

Some of the more enticing offers that car dealers make are on their “demos”—demonstrator cars driven by management or salespeople and sold as “new” cars at a discount. They are also generally used for test drives by customers and sometimes as loaners.

The pitch, of course, is that you are getting a new car with only a few careful miles on it. A car is considered new if it has never been officially registered with the state, but in fact demos are used cars in all but their legal status. This fact creates problems for buyers.

  1. Demo cars often get hard use, and their history is hard to determine. Check them out carefully, as you would any used car. Get maintenance records.
  2. Dealers often don’t figure depreciation into their asking price. Negotiate!
  3. The mileage on the car is usually subtracted from the factory warranty.
  4. If the car has been titled and registered by the dealer (as most last-year’s models are), then current rebates and incentives don’t apply.

So you, dear buyer, must get it in your head that this is indeed a used car that they are dangling in front of you, and all the caveats of buying used apply.

Consumer Reports’ Mike Dempsey says that, while there is no rule of thumb for negotiating a discount on a demo, the price should be somewhere “between the vehicle’s new and used-car value.” Jeez, that was helpful, Mike.

A better way to negotiate for a demo can be found at CarBuyingTips.com (scroll down): First, if the car is less than 6 months old, deduct $3,000 for the car’s instant depreciation. Then take off $0.15 per mile, just as you would pay for overage on a lease. Deduct these figures from the car’s MSRP and, finally, compare what you would pay negotiating for a brand-new vehicle. You may be surprised.

Or, if the car is over 6 months old, just take 20 percent off the MSRP.

The thing to remember is that because demos are in fact used cars, you should buy accordingly. Sometimes, by just exploring the used-car market, you can turn up a better deal. And, as you know, our DealFinder is your best resource for doing that.

Bottom line: Don’t take demos too seriously.

Have you ever gotten a really good deal on a demo car?

—jgoods

Find Used Cars in Your Area at CarGurus

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