What is a demo car?

Demo, is short for dealer demonstration, and refers to cars at new car dealerships that have less than 5,000 km on the odometer. These cars are usually showroom cars that prospective buyers have taken for a test spin or sale people have driven themselves.

Many dealerships will encourage their sales staff to drive these cars so they know about the vehicle and have used the features and technology of the car themselves. Additionally, they can be driven by potential buyers with sales staff to try and entice the customer into buying.

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In the market for a new car? The table below features car loans with some of the lowest interest rates on the market.

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LenderCar LoanInterest Rate Comparison Rate* Monthly Repayment Interest Type Vehicle Type Maximum Vehicle Age Ongoing Fee Upfront Fee Total Repayment Early Repayment Instant Approval Online Application TagsFeaturesLinkComparePromoted ProductDisclosure
6.24% p.a.
7.36% p.a.
$583
Variable
New
No Max
$8
$400
$35,000
  • Available for purchasing new and demo vehicles
  • $5,000 to $150,000 loan amount
  • Redraw facility available up to $5000/day
  • Required: Good credit history, stable employment history. Aus citizenship or PR.
 Disclosure
6.34% p.a.
7.46% p.a.
$585
Variable
New
No Max
$8
$400
$35,084
6.57% p.a.
7.19% p.a.
$588
Fixed
New
No Max
$0
$250
$35,278
  • No vehicle age limit
  • No ongoing or early exit fees
  • 1-7 years loan terms. Pay monthly, fortnightly, or weekly
 Disclosure
6.52% p.a.
6.95% p.a.
$587
Fixed
New
No Max
$0
$0
$35,236
Important Information and Comparison Rate Warning

All products with a link to a product provider’s website have a commercial marketing relationship between us and these providers. These products may appear prominently and first within the search tables regardless of their attributes and may include products marked as promoted, featured or sponsored. The link to a product provider’s website will allow you to get more information or apply for the product. By de-selecting “Show online partners only” additional non-commercialised products may be displayed and re-sorted at the top of the table. For more information on how we’ve selected these “Sponsored”, “Featured” and “Promoted” products, the products we compare, how we make money, and other important information about our service, please click here.

The comparison rates in this table are based on a loan of $30,000 and a term of 5 years unless indicated otherwise. The comparison rates for car loans and secured personal loans for the relevant amounts and terms are for secured loans unless indicated otherwise. The comparison rates for unsecured personal loans are applicable for unsecured loans only. WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. Comparison rates are not calculated for revolving credit products.

Monthly repayment figures are estimates only, exclude fees and are based on the advertised rate for the term and for the loan amount entered. Actual repayments will depend on your individual circumstances and interest rate changes. Rates correct as of . View disclaimer.

Important Information and Comparison Rate Warning

Types of demo cars

Not all demo cars are the same. The term 'demo car' can refer to a number of dealership options:

  • Demo runout model : When a car manufacturer is about to introduce a new model, dealers place an emphasis on getting rid of the older models. If you aren’t phased by owning a car with a platform from yesteryear, then you can save thousands on a runout model, or even more if it’s a demo runout that has been driven already.

  • Courtesy car – When customers bring in their car for servicing, some dealerships will loan out a courtesy car for them to drive around in the interim. This car can come with added risk as it has been driven without a dealership staff member supervising. But with the risk usually comes a considerable discount on price.

  • Dealership demonstration car – This is the most common demo vehicle. This is the car that sits on the dealership floor, and is taken out for a spin by prospective buyers and also driven by dealership staff.

Buying a demo car checklist

Because a demo car is not new, you should essentially treat it as a second hand car when enquiring. Make sure you ask the dealership:

  • What is the car's history?

  • Is there any damage/wear and tear on the car?

  • How much registration is left on the car?

  • Is the car under warranty and how long is the warranty for?

  • How much is the brand new version of the car?

Even though dealers usually do car inspections themselves, for peace of mind you might want to enlist the help of your own inspection service say from a mechanic or a motoring body. Under Australian consumer law, all cars sold at dealerships in Australia should come with a roadworthy and a statutory warranty.

Why are demo vehicles cheaper than new cars?

As soon as a car is driven off the lot, in any capacity, the value immediately depreciates. This is no different with demo cars. Typically, once a demo car has driven more than 5,000km it is classed as second-hand or used.

The upside of demo cars is they are basically a new car, but with a considerable discount. Because they are often show-room cars, they are clean, well-maintained, and often come with all the newest features and technology. That’s because the dealership is using that car to show-off to customers.

Pros of buying a demo car

Buying a demo car could save you thousands, and because dealerships don’t want to keep these models long enough for them to be considered used, they often will be willing to slash the price to sell them. Because they are showroom-level cars, they often come with the latest technology, features and designs.

Another big plus of demo cars is you can drive away on the day with your car - there are no wait times for delivery. With new cars, delivery of a vehicle with your exact specifications such as specs and colour could take days or weeks as the dealership sources the vehicle from the manufacturer. Further, the pandemic has influenced supply of vehicles all over the country, meaning many buyers are waiting months for their car to arrive in some cases.

Cons of buying a demo car

A demo car is technically not a new car, meaning it comes with the risk of damage to the body in the limited driving it has done. Think minor stone chips, road rash and minor gutter rash on the wheels. Similarly, it will have some wear and tear from being out on the roads for potentially thousands of kilometres.

Buying a demo car comes with the knowledge that many other people have driven the car, and sat in the same drivers seat you sit in - potentially having farted. If you want a new car that is solely yours, then a demo car may not be for you.

Image by Orkun Azap via Unsplash