A demo car may seem like a great way to get a new car at a large discount. Dealerships use demo cars to allow customers to test drive a vehicle, as a loaner car, and even offer the car to salesmen to drive once a quota is met. Since the car hasn't been registered, it's still considered a new car even though they may carry higher than average mileage. A demo car isn't always a bad idea, but there are things to watch out for if you are thinking of purchasing one.
Tip #1 - Understanding the Warranty
New cars always carry a warranty from the manufacturer. When you go to purchase a demo car, you will likely be offered an extended warranty. This may or may not be needed. Since the demo car has been driven, the manufacturer may consider the first day the car was driven as the first day of the warranty. Check to find out when the original in service date was. This will help you determine how much of the existing warranty is left. If the car has been driven for 6 months as a demo, your warranty may be decreased by 6 months. The mileage also needs to be taken in to consideration. A warranty that is good for 36,000 on a car that already has 5,000 miles on it will leave you with 31,000 miles on the existing warranty. If you can live with this, or it's just been driven a short period of time without excess miles, the extended warranty isn't going to be worth the extra money.
Tip #2 - Know Additional Insurance Costs in Advance
Insurance for a vehicle is generally more costly for a used car than it is for a new car. If you are looking at a demo car, take note of the mileage and call the insurance company before you make the purchase to see how they will handle this. It's not uncommon for an insurance company to insure a demo car at a used car rate because of the extra mileage. If you are financing the car you will be required to carry full coverage, and for a car that's been insured at a used car rate, this can be quite expensive. If your insurance company is going to handle it as a used car, it may be worth the time to call around and get quotes from different companies if your heart is set on the demo car.
Tip #3 - Expect Extra Maintenance Fees
A demo car is generally driven hard. Since the people driving these cars know they are only tester or loaner cars, there is no incentive to take care of it. Even if the demo has mileage that is reasonable, you shouldn't expect to drive away in a perfect car. The dealership may tell you that the car was cared for, and offer you service records. This doesn't mean problems from hard driving won't pop up. Find out exactly what the warranty covers, and expect to have to come out of pocket for potential problems down the line.