Can You Save Money with Demo Cars? These Negotiation Tips Could Help

Buying a demo car is one way to get the newest model at a discount, but you might be surprised by how much you can save.

Salesperson selling car to woman in showroomShutterstock

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What if you could buy a new car without paying top dollar for it? Shopping for demo cars—cars used for demonstrations like test drives—could be one way to make your new-car dreams come true.

However, you should know that while these cars may come with drool-worthy factory add-ons and low mileage, saving money with one is not guaranteed. So, how exactly is a demo car used, is it a good idea to buy one, and what demo-specific negotiation strategies might customers use?

What Is a Demo Car?

A demo car is used for demonstration on a vehicle lot so customers can experience the model as they shop. Dealership representatives can also use these cars as sales tools, showing customers how different features look when gathered and affixed to a waxed, glossy car.

Demo cars may be lightly used during test drives by prospective customers or dealership staff, and may be sold at a discount to account for this. Even though demo cars accumulate some miles, they’re legally considered new because they’re never registered by a state's Department of Motor Vehicles (DMV) prior to a customer’s purchase.

How Is a Demo Car Used?

There are a number of ways a dealership might use a demonstration car and a variety of people who may use it, including:

  • Dealership staff members
  • Potential customers looking to test-drive the latest-model car
  • Staff transporting the vehicle from the shipping port or between car lots
  • Customers who borrow the car while the dealership services or repairs the client’s vehicle
  • Showroom display as a static demo or floor model

Given these cars are still considered new, but may have a few hundred or thousand miles on them, how much can you expect to save off the same model's Manufacturer's Suggested Retail Price (MSRP)?

How Much Can You Expect to Save With a Demo Car?

Actually, you may not automatically save lots of money by buying a demo car. The deal could depend on how well you negotiate because dealers may initially offer the car on display for the full sticker price.

Here are some negotiating tips:

  • Discount by mile: Ask for a discount of between $0.20 and $0.40 per mile driven
  • Discount by used-up warranty: Ask for the dealer to either extend the warranty or give you a discount for the portion of the warranty that's already used
  • Discount for blemishes: Carefully look over the car, and make note of any scratches, dents, or blemishes that could warrant a higher discount

Make sure you check the price of the same car's brand-new version so you have a baseline to work from.

Pros and Cons of Buying a Demo Car

There are pros and cons to buying demo cars, so be sure to consider both when looking to buy a new car that you'll love for years to come.

Pros of buying a demo car:

  • You get a new model at a discount: This is an opportunity to own the newest model of your favorite car without paying full price. Many times, the demo will be equipped with extra options, features and upgrades requested by the dealership
  • You'll know the vehicle's history: You can ask the dealership for the car's exact driving history, unlike when trying to uncover a used vehicle's past with multiple former owners
  • They qualify for the same deals: Demo cars still qualify for the rebates and special new-vehicle financing options you'd find on the brand-new version

Cons of buying a demo car:

  • The warranty may be shortened: Mileage-based manufacturer warranties will be partly depleted with a demo. If the warranty is based on time, then ask for the car's in-service date. This is when the clock starts ticking
  • There could be unnoticeable blemishes: Several people might have driven this car already, knowing they aren't going to eventually own it. This means there might be little scratches, dents, or other small blemishes they didn't deem important enough to report

Where Can You Buy a Demo Car?

If you've weighed the pros and cons, and have decided to buy a demo car, the next step is finding where to source one.

Demo cars are typically sold at dealerships, so you'll want to call local dealerships and ask about their demo car inventories. They are also sold online and at in-person auctions, though many of these auctions may be for licensed car dealers only. Research car auctions near you, and see which allow the public to participate.

The next time you're in the market for a new car, you might want to brush up on your negotiation skills and consider one of the demo cars available at your local dealership.

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Amanda Grossman
I prefer used cars, having never actually purchased a brand-new car in 38 years. What I love to teach and talk about are the finances behind your car-buying decision — like knowing what kind of car fits into your budget, maintaining a car so that it can perform well, longer, and cutting down car ownership costs.