I went to a dealership and found a new "demo" car for sale at a $4,000 discount. Is buying a demo car a good idea?

    Dealerships are always trying to unload "demonstrator" cars (or "demo cars") -- that were driven by the managers or salesmen but are still legally new. The car salesman may tell you that the demonstrator has been immaculately maintained since it was driven by an "executive." He may also assure you that you can get a far better deal on this demo car than you would get on a brand new car. Don't believe it.

    While a discount of $4,000 may seem generous at first glance, my experience tells me that the selling price of a demonstrator car is often not much less than if you bought the same car brand new. And if you take into account the fact that there is considerable mileage on this "new" car (which, for some manufacturers, gets subtracted from the mileage allotment of your Factory Warranty) and the fact that demo cars often receive lots of abusive wear and tear that may not be noticeable at first glance, the demo suddenly doesn't seem so attractive.

    Best Advice: avoid any offers to buy a demo car.

    What is the difference between a demonstrator car and a used car? Aren't they both considered used?

    A demonstrator car (or demo car) is a new car that has been driven by the dealership's salesmen, managers or executives but has never been registered with the state.

    A used car is any car that has been registered.

    Rule Of Thumb: Once a vehicle has been registered, it is legally considered "used". If the vehicle has never been registered (regardless of how many miles are on it), the vehicle is legally considered "new." Demo cars, therefore, are still considered "new."

    Read More About Car Buying:

    - Car Buyer Secrets
    - Car Buyer School
    - Car Buyer FAQs

    Michael Royce is a consumer advocate and former car salesman. For more car-buying tips and advice, visit his Beat The Car Salesman website.

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    1 - 20 of 301 Comments
    hollimanjrs Sep 25, 2010 1:16 PM
    For that silly person who says people bash car dealers and not shoes sales and funiture sales. Da! Shoes are not a major investment dummy. Besides funiture lasts years longer than a car. not to mention that a sofa does not need continous up keep and repair, hummm. Oh your up side down in payments theory, who created the upsidown in your cars worth, the owner of the car ,hummmmm. Most likely the same people who sold him the car and whom control the industry. By adding high intrest tack on by more intrest from some greedy little car sales man. who then offers you $5000 for your car and says thats the best they can do. Then maybe spend $1000 dollars preparing the car for resale. After which they put a nice fair price on it like $11,000, please. who say they bought you out of the upsidedown. To only slide it in with the sale of the car you are now buying lol. Please on your next coments learn to keep apples with apples an oranges with oranges! P.S my wife has over a 200 pairs of shoes and only one car. Do you get a drift of where im going with this Mr. I want to compare to whole different types of purchases.
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    noletough Apr 10, 2010 12:42 AM
    This is a joke of an article. Demo cars are normally a great deal. Just another guy who does not know anything speaking his mind. In some cases he is right but at least say in my opinion. Your a moron!
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    para4nalia Mar 09, 2010 12:17 PM
    We bought a demo/new with 2,500 miles after checking lots of other dealers' prices and found that same make & model used cars with 20 - 30K miles were the same price. We got that price on the demo because of $3,500 in new car rebates which didn't apply to the used models. Car is in beautiful shape and was a good deal.
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    davidejack Dec 12, 2009 7:11 PM
    If you buy a car, you should pay for what you get! If it has miles on it, then you are entitled to wear and tear of about $.50 per mile. If you don't save up front, you are going to lose it when you trade. Why do you think they always make such a big deal over mileage when YOU trade. Everytime your odometer turns to a new 10,000 mile level, you get socked more! Many times, car dealer management even keep salesmen from driving a used car if it is about to turn over from say 49,995 to 50,000 because it will take such a big hit in the NADA, Kelly Blue Book, and other pricing guides. Anyway, if you are buying a brand "new" car, it should have very few miles...certainly, less than 100. If not, they should give you at least $.50 per mile discount on top of all other discounts. They will tell you all kinds of things to make you feel it is no big deal, but it is. If you are going to drive it for 100,000 + miles, then it won't make as much difference, but if you trade every 3-5 years, like most people do, with 36K to 75K miles, then it makes a big difference. Another thing is not to believe that "invoice" is what the dealer is paying for the vehicle. That is so far from reality that if it were true, they wouldn't be in business. Salesmen make about 25% - 30% of the "profit"...but you will never know what those figures are to be able to determine what the total profit is to a dealership. There are a number of different figures that you will never see, including actual bottom line costs to the dealer after all rebates, incentives and dealer holdbacks are paid back to them by the manufacturer AFTER the sale and/or on certain annual dates. Dealers are rewarded for the number of cars sold and many times see big paychecks from manufacturers when they reach certain totals. So ALL of that can and should be considered when negotiating your deal. Car dealers need to make money, but they do not need to make a killing, which most of them honestly do, especially on the used cars. They are almost as dishonest as our government is...they have created this huge system with published figures and guide books with inflated figures. Ever wonder why most people are ALWAYS "upside down" when they try to trade? It is all part of the game. When you buy, they make you feel like you just stole the car from them because they made you such a great deal...and all the numbers seem to make sense. You go to trade it and it is worth thousands less than what you owe. I know, I sold cars for two years for a large Ford, Lincoln Mercury Dealership...just long enough to realize what was going on. I also benefitted from that relationship because one time the owner sold me a brand new Ford Windstar that was loaded. The MSRP was $36K...and I ended up buying it for $26K...there was no profit in that particular deal for the dealership, but you get an idea how much they have to play with...(10K in that case) Published advertised invoices used to be much lower than they are now...but the bottom line actual costs have not changed. You should still be able to go into any car dealership and purchase a brand new car for the latest year at 15%-25% off the MSRP...give or take a bit. You must do your due diligence and research out each deal, because they all can vary a bit. The best deals are end of year sales when you see the $8000-$12000 rebates/discounts advertised. That can be both end of model years, many times end of September, other times, end of calendar year...December. Eg, I once bought a fully loaded GMC Yukon XL listing for $48K for $36K. It had everything a Denali had except for the big engine, two tone leather seats, and a cosmetic package on the grill, etc. The Denali listed for almost $60K...so I essentially had a Denali for about $24K less than what the Denali listed for. You have to be smart and firm. If you don't know how to buy, you must learn. If you can't learn, pay someone who knows how to buy to help you. It could save you thousands. Last point...a good friend of mine recently shopped around for a new buick. He shopped and shopped. When he got his best price I told him I would see what I could do for him. He told me he was satisfied with the deal he had if I could not do any better. It took me about three days, working with three different dealers and the internet, but I found the exact same car, same features and colores, but one year newer for $2300 less. He was thrilled and so was I as I was able to do my friend a huge favor. Buying a car is not fun for most people. It is a war out there. It is getting more difficult because so many things are changing which are hard to keep up with, but if it can do it, it can save you thousands of dollars. Hope this helps. If you read anyone calling me crazy, it is probably some car dealer who is angry because this exposes some of their nonsense. One more last word...that is only half the financial battle...you must also be totally prepared for the finance office...they make more than the dealer does on the car. The finance managers work on commission...and they make a lot on interest, warranties and all of the special add on packages. BE CAREFUL...you can spend thousands in a finance office and never know it. That is where many car deals turn you way upside down because all of those added figures make the total you end up financing soar! Get preapproved with your local bank before you ever go to shop...then you can tell them what you already have and they WILL do everything to get you a lower interest rate. That is how they make money. Now go buy...have fun...and save money!
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    eglows48 Oct 18, 2009 12:04 AM
    dpizzan's comments are right on target. do your homework. for at least two years l looked at and watched the performance of and asked 'drivers' about the 'camry' in early yr 2000...it was my car of choice for several reasons. when i went to the car dealership with my husband, l told him (before leaving the house) that l wanted a black camry and I wanted to pay $ X amount for it. I did not have a trade in and I did not tell that to the salesperson. We arrived, were met on the lot. I said I wanted a black camry and was told I could take the car out for a test drive. I said it wasn't necessary but my husband insisted. The next day I went back and drove off with my black camry on my very own terms. trust in yourself and your ability to get what you want, just do your homework.
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    lkr12345 Sep 23, 2009 4:48 AM
    This article is dead wrong. The best deal I ever got on a car was a demo car. I got it at a 20% discount with only 2k miles on it. I drove it for years and never had a problem with it. If ever given the opportunity to buy a demo car that happens to be exactly what you're looking for, jump at the chance!
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    dpizzan Sep 22, 2009 7:53 PM
    Another thought.....we all the AVAILABLE information with the SUPER HIGHWAY internet research...etc...etc.....Do your homework before you go to a dealership....know your budget and be realistic with the budget....visit a few dealer's...take mental notes on how you are treated...did the Sales Consultant listen to your needs...wants.....choose the right vehicle....walk around demonstration...test drive....orientation of the service department.....answer any lingering questions that you may have. Following some of thes simple steps...will make your dealership experience a little more pleasant. We strive to exceed our customers expectations....because if we don't.....someone else will!
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    twillvin Sep 22, 2009 7:50 PM
    Picking on Automotive dealers is like picking on the proverbial tallest midget. Why not focus more on the modern robber barons on Wall Street that robbed the public blind and put many auto dealers out of business during this recent financial crisis.
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    wjoutten Sep 22, 2009 7:50 PM
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    mwh53 Sep 22, 2009 7:40 PM
    Bogus article. I've bought several demos and each experience was positive and saved me money. My next car? ...a demo!
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    dpizzan Sep 22, 2009 7:36 PM
    It truly amazes me how people continue to bash the automotive industry....Sales Consultant's...Demo Vehicles.....etc. However, when they shop for shoes at Macy's....Norstrom's....WalMart.....there is no price negotiations.....Go shop for furniture some time....average mark up in a sofa...approximately 250%....or how about this.....a pair of shoes....heels....women will pay 100,00 ...... 150.00 for a pair....made in the sweat boxes of China....total cost to make....may 5.00.....or designer Coach bags....300.00.......600.00......cost to make...maybe 25.00 to 30.00....And you have the nerve to come to a dealership....looking at a 25,000.00 - 30,000.00 dollar vehicle with no money down....upside down in your trade.....oh...by the way...include my sales tax and registration....and wanting a payment of 300.00 per month!!!......Must be Economics 101
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    grambuggy69 Sep 22, 2009 7:13 PM
    Also remember when you buy your new car check your insurance you may qualify for a program that if anything were to happen to it in the first 12 to 18 months or 10k miles they will replace it or give you the new cost value on it but the catch is when you buy the car it has to be under 150 miles on it as demo cars have many more miles then that on them so they wouldnt qualify for that
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    dimefan88 Sep 22, 2009 7:07 PM
    honestly, working for a dealership i have seen many demo's come and go through the years. we had avehicle damaged by a buisness manager that was relatively significant and after repairs, we had to display in the window, the damage estimate and total cost of repair, and the insurance documentation from the accident. now, technically a dealer needs to do that to avoid someone wanting to carfax it later on discovering anything other than that. i believe that a demo is a way to go as far as purchasing a car. look at it this way if there is an issue with the vehicle while its being demoed that isnt a result of human error. whos to say that couldnt possibly mean that more than one could have the same problem later on even if the demo has 4k miles and the brand new one has 5 miles. id trust a demo just as much as something thats had nothing ******* pre delivery inspection (PDI). that just tells me that even though that car has miles, and maybe a small blemish or two in the paint, ******** mechanically sound. and if something does go wrong down the road ill be more than happy to pay for the extended warranty added to the car for around the same price the car stickered for, knowing that it was a significant discount.
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    ryan8681 Sep 22, 2009 5:49 PM
    Do you cuss your local deli for making a premium on your lunchmeat buy every week? How about the real estate agent that gets 3% from your purchase of a new home? Ever question the oil change that you pay 30 bucks for and when the oil cost 10, and the filter cost 4 bucks? Yet everytime anyone brings up car sales man they are the worst people in the world trying to make a buck.......Average salesman make 3 grand a month, 3 Grand!!!!! Really killing it arent they?! Seriously, treat them with the same respect that you would want to be treated and your car buying experience will be much more pleasant!!!! On the subject of demos....I know that Chevrolet and Hyundai, Kia alllll offer a full factory warranty (meaning the warranty starts when you purchase it, not from mile 1).......Many people prefer them because of the discounts combo with the financing available....And i hate to say it, but you are taking a chance when you buy ANY car, new or used.......my grandfather loves Nissans, owned them for years, Got Two Lemons in a row!!!!!!! Still buys them for some reason, it happens! Seriously people need to realize that salesman dont build the cars, So stop blaming them for your vehicles problems.
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    pinkone06830 Sep 22, 2009 5:40 PM
    Having been a car dealer for 25 years I can say buying a demo is like buying any car. DEMO any car you buy b4 sale. Don't pay for extras you didn't want. Keep telling the seller you would rather wait for a new car, so if she really wants you to buy the demo, she has to give you the best value. Some dealers put their worst sellers into demo service. That never made any sense to me. I always put my best cars on demo. It was like a turnstile on Saturdays for me. Often I would go home in a rental! My customers came to know their demo was special, and I never had a problem after sale because if there were any adjustments, I got them corrected b4 I sold the car. Check which manufacturers allow the dealer to submit a warranty claim b4 the car is sold. Those which don't are the demos you should not buy since those dealers won't fix an otherwise warranty issue. The root of this problem is the manufacturer, not the dealer.
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    hawaiianchic1 Sep 22, 2009 4:53 PM
    I bought a 2007 Tahoe demo with 4,000 miles on it. The car was fully loaded and they gave it to me for the price of a basic stock car so I thought that I was getting a good deal. Within the first week of having it the rear air conditioning system went out and 2 of the windows would not go down. Six months later there was some kind of electrical short and the car would not even start. One month later the touch screen for the radio/navigation system went out. I kept having these same problems for TWO YEARS. They said they fixed it but apparently they just put a patch on things. Now my car still has these same problems but my warranty is out so Im stuck with paying for the repairs each time. I am not the only one who has had a bad experience with this dealership. There have been many complains filed. So perhaps its just the dealership and not the fact that it was a demo car.
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    tspallet Sep 22, 2009 4:36 PM
    I bought a demo SUV and was told by the salesman that the car had been broken into through the back window and that they had to replace the window. Come to find out about 6 years later when I went to sell the car and pulled a car fax report the car had been rear ended and there was some significant damage. Never really had any problem with the vehicle but it just shows why car salesman have a bad reputation.
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    sgssbi Sep 22, 2009 4:31 PM
    There is one consideration that was not discussed in this article that may be an important factor in a buyer's decision whether to buy "New", Used" or a "demo". Demo's, as pointed out, are considered legally "New". Often this can mean a difference of several percentage points in whatever financing is secured. I know my credit union finances new cars at between 5.5 and 6.5% while used cars are financed at between 8.5 and 10.5% depending on the term of the loan
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    soccer828 Sep 22, 2009 4:01 PM
    first off im 66 and have never trusted a car salesman,new or used they are all after every buck they can make.ive called them a few names that they remind me of ,street walker and im being nice.tere all a bunch of dishonest and nasty humans
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    andrb66 Sep 22, 2009 3:39 PM
    I have purchase three cars that had been used as a demo. I did not have any problems that is stated in the blog. Apparently, it is only one persons opinion and you know what they say about opinions and a**holes, everyone has one.
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    Been offered a demo car by your auto dealer? Learn exactly what a demo car is as well as some of the downsides of buying demonstrator vehicles.


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