Is a Dealer Demo Considered a New Car?

At most dealerships, there are shiny new cars that the managers and salespeople get to drive. These cars are also used as the unofficial test pilot from the bunch, and while they are new, the dealer demo car has seen its share of the road. 

Technically speaking, the dealer demo car is a new vehicle. In California, the demo car can be sold new, as long as it hasn’t been titled or registered to another driver. These cars often have low mileage and a tempting price tag, but are the deals as sweet as they appear?

The attorneys at The Lemon Pros deal with legal issues surrounding the demo models. With a specialized practice area centered on all types of cars, we’ve been able to help clients recover valuable compensation for their defective vehicles. Contact us today for your free consultation.

In this article, we'll explore when a dealer demo is classified as new and when it should be sold as a used car. We'll also weigh the pros and cons of buying a dealer demo and explain how Lemon Law protections come into play in these scenarios.

What Is a Dealer Demo Car?

A demo car is one that is in the possession of the dealership and is given to the staff for personal use or test drives. Mileage typically remains low, usually under 3,000. After some use, the dealer will offer the car for sale.

These vehicles typically come loaded with features and optional packages since the point was to highlight these perks to potential drivers. Because they've only been owned by the dealership and never titled to a private user, the car can be sold at a discount to the public.

When Is a Demo Car Still Considered New?

According to California’s Vehicle Code and the False Advertising Laws, dealerships have to abide by certain rules when claiming a car is new. Based on these regulations, a dealer demo is considered a new car as long as it meets the following requirements:

• Never titled or registered to an individual
• Covered by the original factory warranty
• Low mileage (typically under 7,500)

While there aren’t any requirements, the dealer shouldn’t offer a demo car for sale if it has significant wear and tear. Basically, the car should still appear to be new.

When Is It No Longer New?

Once the car has been titled or registered, even to dealers, it can no longer be considered new. It would have to be sold as a used vehicle. Additionally, if the vehicle has been on so many test drives that there’s an excess amount of mileage, it can no longer be called a new car.

The manufacturer and dealer cannot sell it as a new vehicle if there have been major components replaced or significant damage has occurred. Heavy wear and tear may also cause the car to be sold as a pre-owned model.

Pros and Cons of Buying a Dealer Demo

Depending on your situation and budget, it may make sense to drive a dealer demo, but it's not the right choice for everyone. Here are some important considerations to keep in mind when car shopping.

Pros of Buying a Dealer Demo

The dealer demo is going to have a lower price than a similar new car on the market. You can save a lot of money if you aren’t bothered by how it was used.

Even though the vehicle has been lightly used, it’s still going to include the factory warranty, so you get the same protection as a new car. If there's a defect that crops up, you can take it back to the dealership for free warranty repair.

Because the car hasn’t left the dealer’s possession, it should also be well-maintained. If the car was due for its first oil change and tire rotation, the dealer would have performed it.

Cons of Buying a Dealer Demo

Depending on how heavily the demo was used, there could be too much wear and tear. It may not look like a brand-new car anymore, which would lower the resale value.

It may also not qualify for new car promotions or rebates. With these incentives, you may be able to buy or lease a brand-new car for a similar amount.

Finally, there could be some confusion regarding the warranty start date. Many people believe the factory warranty starts when the car is sold, which is true in some cases. But the effective date could also be from the time that the car arrived at the dealership, so you want to get clarification before buying.

Is It Worth Buying a Dealer Demo?

If you have access to a dealer demo, you may like the idea of a steep discount. Depending on the price savings available to you, the mileage of the car, the warranty status, and the vehicle’s condition, you may want to take the plunge and buy the vehicle.

Before making that decision, however, you should compare the savings with the cost of a similar brand-new model. Once you add the incentives and rebates, you may find that the price difference isn’t as much as you once thought.

Are Dealer Demo Cars Covered by Lemon Law Protections?

With the demo car fitting the criteria for “new car” status, there may be some Lemon Law protections worth knowing about.

The dealership cannot sell an unsafe vehicle, but the Lemon Law guidelines differ for every state. For example, your state may only have coverage for new vehicles. Furthermore, it will depend on what the state considers a “new” car.

While the Magnuson Moss Warranty Act covers drivers nationwide, California offers further protection with the Song Beverly Consumer Warranty Act. In California, dealer demos are included in the new car guidelines.

With the demo car never being titled to a private owner, it qualifies as a new car. However, you must consider the mileage and age limitations. In California, the defect must first appear within 18 months or 18,000 miles, so the time the car was a demo could affect any future claim.

Warranty status is also going to prove to be crucial. The car must be covered under its original factory warranty, which the demo car usually has.

What Should You Do If Your Demo Car Has Defects?

Not only can you sue a dealer for selling you a lemon, but you can file a claim for compensation. It’s best if you understand your state laws and have representation to ensure the best outcome.

First things first, make sure you document everything. Drivers need to have a record showing all of the repair history, warranty paperwork, and communication with the dealership or manufacturer.

Additionally, you want to give the dealership adequate time to repair the problem. In California, the manufacturer has a minimum of four repair attempts to resolve the issue in a typical situation. The exception is when there’s a serious safety issue involved. In that case, you may only need to have two repair attempts performed.

Most lemon law attorneys work on a contingency basis and offer a free consultation. Therefore, you may not have to pay anything up front. With the help of a qualified lawyer, you can expect a larger settlement and faster resolution.

Need Advice on Lemon Law Rights?

While most demo cars are considered new and have lemon rights, not all will qualify. For that reason, it’s best to contact a lawyer if you are having trouble with your demo vehicle. If you are still on the fence about buying a demo vehicle, make sure you verify its status and warranty coverage before signing a deal.

The Lemon Pros have successfully navigated suing manufacturers and dealers about defective demo cars. You can find us on Google and contact us today for your free consultation to see what you may be owed.

FAQs

Here are some frequently asked questions about demo cars:

Can a Demo Car Be Sold as New or Is It a Used Car?

In California, a demo car can be sold as a new car as long as it has never been registered or titled to a person or company. The demo car retains its factory warranty and has low mileage, while allowing drivers to buy or lease at a heavily discounted price.

Does a Dealer Demo Get a Full Warranty?

Yes, the demo vehicle comes with the original factory warranty. However, the warranty coverage may start from the time that the vehicle was delivered to the dealer instead of when you first register it. You want to verify the terms before deciding to buy the vehicle.

Are Dealer Demos Covered by Lemon Laws?

California covers the dealer demo as a new vehicle if it was purchased with the original factory warranty and the defect began within 18,000 miles or 18 months. Lemon Laws are applicable to personal vehicles, motorcycles, trucks, and some recreational vehicles.

Are Demo Vehicles Titled?

While the dealership typically owns the demo vehicle, it hasn’t been titled to any driver. Once you buy it, you will register and title it in your name. Therefore, the Lemon Law applies to these vehicles in California.

Is It Good to Buy a Dealer Demo Car?

Most dealers sell demo vehicles at a substantial discount, making it a cost-effective way to buy a new car. It can be a good deal, as long as the manufacturer selling the car is honoring the factory warranty and the vehicle was well taken care of. However, you may be able to get a comparable deal on a brand-new vehicle by looking at the available incentives and rebates, so it’s always good to do your homework first.