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Pros & Cons to Buying a Demo Vehicle

by Nancy Wagner

If you're in the market to buy a new vehicle, a demo car, also known as a demonstration car, might be just the ticket. Demo vehicles are driven by dealership staff or are test driven by prospective car buyers, so they do come with miles on the odomoeter. Turning those miles into savings and knowing the other pros and cons of buying such a vehicle is key to figuring out if a demo car will meet your needs.

New at Used Prices

The dealership can rightfully claim a demo car is still considered new because it's never been registered. But it may seem like a used vehicle if it has hundreds or even a few thousand miles on the odometer. If the car has lots of miles on it, negotiating a lower price gives you a near-new car for less than the sticker price on a never-driven model. But staffer Mike Dempsey writes in Consumer Reports that there are no set guideline for getting a lower price on a demo car. Philip Reed, senior consumer advice editor at Edmunds.com recommends deducting a minimum of 20 cents for each mile on the odometer.

Rebates and Promotions

Since the car is still considered new, it may qualify for any manufacturer rebates, incentives or promotions the dealership is offering. This is a big pro since it helps lower the cost of buying the car. Ask the dealer about incentives, or visit a site such as Edmunds.com Incentives and Rebates to find out what is available for the brand and model you're interested in buying.

Wear and Tear

As you might expect, the staff or prospective buyers driving a demo car don't own it, so they may not be as careful with it as you'd hope. The car might even have been used as a loaner by the dealership's service department. This wear and tear may not be visible at first, says Michael Royce, a former auto dealer on AutoBlog. So, you may feel you're getting a pristine car when you first inspect it, but upon closer examination, you may discover otherwise.

Insurance

When you buy a demo car with a few thousand miles on it, the insurance company may not value the car as a brand new vehicle. This means the policy they sell you may not cover the total cost of replacing the car in the event it's totaled. You may want to purchase gap insurance to cover the difference between what your insurance coverage pays and the remaining loan amount if the car is totaled, although this adds to the overall costs of buying the car.

Warranty

Because the car is considered new, you get the advantage of any factory or sale deals, a big advantage over used cars. Keep in mind that the warranty on a demo car may be reduced because of the miles on the vehicle when you buy it. For instance, if the warranty is for 50,000 miles, and the car has 4,000 miles on the odometer when you buy it, the warranty is only good for 46,000 more miles.

About the Author

Nancy Wagner is a marketing strategist and speaker who started writing in 1998. She writes business plans for startups and established companies and teaches marketing and promotional tactics at local workshops. Wagner's business and marketing articles have appeared in "Home Business Journal," "Nation’s Business," "Emerging Business" and "The Mortgage Press," among others. She holds a B.S. from Eastern Illinois University.

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