Not every used automobile has been owned by an individual. Some are “demos,” which dealerships have used for test-drives and other purposes…“program” vehicles, which have been used by the manufacturer in various settings such as trade shows…“fleet” vehicles, which have been owned by municipalities or corporations and used by employees…or rental vehicles. These sometimes are priced hundreds or even thousands of dollars below vehicles of a similar model, age and mileage. But are they great bargains…or no better than a standard used car? Here’s what you need to know…
DEMO AND PROGRAM VEHICLES
Demos usually are from the current model year. They have been driven by employees of the auto dealership…have been taken on test-drives…and/or have been loaned to customers while their own vehicles were being worked on by the dealer’s service department.
Program vehicles might have been put on display at trade shows, driven by one of the automaker’s employees or test-driven by journalists writing reviews. Unlike the other vehicles covered in this article, demos and program vehicles usually are classified as new cars, not used cars. Autos are legally considered new until someone takes out a title on them, something that dealerships and manufacturers rarely do with demos and program vehicles.
Buying a demo or program vehicle likely will shorten your warranty coverage compared with buying a truly new car. Ask the salesperson to tell you the “in-service” date. This will serve as the vehicle’s warranty start date—which is likely many months earlier than the date you purchase the auto, reducing your warranty coverage. The miles already on the odometer will cut into your warranty, too. Demo/program vehicle warranties do not reset when the car is purchased.
But demos and program vehicles still can be smart buys. They tend to have extremely low mileage (potentially a few thousand miles or less)…may include attractive options packages…and, for the most part, have been driven responsibly and were well-maintained. When dealership employees drive demos, for example, they tend to baby them because they know that any damage or serious wear would detract from their value. Salespeople often are in vehicles during customer test-drives, which tends to discourage irresponsible test-driving.
If you can find a manufacturer-certified used car of similar age and mileage, it might sell for a lower price than a comparable demo/program car—but it might not be possible to find the used car that you want with just a few thousand miles on the odometer. Privately owned cars rarely are resold that soon.
What to do: If you consider buying a demo or program car, confirm that you really are getting a good deal. Sometimes a salesperson will present a demo or program vehicle as though the price is a steal when the price actually is similar to what a buyer could have negotiated on a 100%-new vehicle. Use a car-shopping website such as Edmunds.com (where I am employed) to compare the price you are being offered to what other buyers actually are paying for the new vehicle. (Remember to include the value of any options packages.) Also, use this or another car-shopping site to research the fair purchase price of this make and model as a low-mileage used car, and make a counteroffer based on this figure. A demo or program car might legally be new, but it is reasonable to argue that it really is more like a low-mileage used car despite its legal status. The dealership is unlikely to come down to this used price because it probably can find a buyer willing to pay more, but because of the mileage, it should be willing to offer you a significantly better deal than you would get on a similar 100% new vehicle.
Ask what the dealership charges for an extended warranty on the vehicle as well, and then use this in your negotiation. If one year of the demo’s warranty already is used up, for example, and it would cost you an average of $300 per year to extend the warranty, point this out and ask to have the price reduced to compensate. If you are asked to sign any disclosures about the vehicle, read this paperwork carefully—occasionally dealerships disclose precisely how a demo or program vehicle was used because its use was atypical or extreme. You probably don’t want to buy a program car, for example, that was used to teach people how to drive aggressively on a track.
Where to find them: Ask in person whether a dealership has a demo or program version of the car you are shopping for.
FORMER RENTAL CARS
Car-rental companies often sell vehicles when they are one to four years old and have 25,000 to 50,000 miles on their odometers. Most—though not all—rental cars are base or midlevel models with few options. Are they a smart buy? Only if you are comfortable with the fact that your car has been driven by hundreds of different people, at least some of whom probably treated it poorly.
On the plus side, major rental companies generally maintain their cars well, and they often sell them for hundreds less than you likely would pay for similar individual-owned cars at a used-car lot. These days, many rental-car companies also make used-car buying simple—you can view the cars for sale in your area on their websites along with their no-haggle prices. If your priority is a low-pressure, no-haggle used-car buying experience, this could be the way to go. Some rental agencies provide limited warranty protection in addition to any remaining manufacturer warranty. Enterprise and Hertz, for example, provide 12-month, 12,000-mile limited powertrain warranties.
What to do: Check whether the rental company will let you rent the car for a few days before you commit to buying it. This usually is allowed, and it’s a great way to weed out problem vehicles. (Besides driving the car to see how it performs and feels, take the car to an independent mechanic for a once-over during this extended test-drive.) Most major rental firms will waive the resulting rental charges if you decide to buy the car.
Where to find them: Check on the major rental firms’ websites.
Governments and companies sometimes sell cars that they owned for employee use.
Are they a smart buy? Potentially—if the price is attractive and you choose carefully. Overall, fleet vehicles tend to be in no worse shape than similar used cars that were in private hands. They even might be a bit better because they usually are professionally maintained on a regular schedule.
Fleet cars are more likely than rental cars to have been driven responsibly. The employees who drive fleet vehicles know that getting a ticket or getting into an accident in their employer’s car could have negative career ramifications. There are exceptions, however—former police cars and taxi cabs often are driven very hard, for example. Some delivery vehicles have endured hard miles as well.
What to do: Before buying a fleet vehicle, ferret out details about how it was driven and who drove it. If it is a nice sedan that was used to ferry around clients, it probably was driven conservatively…but if it’s a pickup truck that was used to carry heavy loads or pull a trailer, it has had a tougher life than the average privately owned used pickup.
Request a copy of the vehicle’s service records—most companies keep meticulous fleet records. Check these to confirm that maintenance was handled on a regular basis and that the vehicle had no major accidents or recurring problems.
Where to find them: Former fleet vehicles are sold in the same places that other used vehicles are sold—on used-car lots, through classified ads or Craigslist.com, etc. But when a fleet vehicle is sold on a used-car lot, it might not be possible to obtain that vehicle’s service history…and you might not learn that it was in a fleet unless you obtain a vehicle history report from a service such as CarFax. Some fleet vehicles are sold at auctions—but these auctions are best avoided if you are not an auto expert (or cannot bring an expert with you). Bidders often are not even allowed to test-drive vehicles before bidding on them.