A pre-registered car (also known as a pre-reg) is a car that has never been owned by an end-user. Instead, the car has been sold to a dealership and registered as sold to the DVLA.
Dealerships often have targets that need to be hit by the manufacturer and may get incentive payments if they hit them. In order to hit the targets and receive these payments, dealerships could consider buying the car and registering it to themselves. This is good news for the manufacturers as it increases their quarterly sales figures as soon as it’s registered with the DVLA by the dealer.
It can make sense for the dealer to buy the car and sell it as a pre-registered vehicle to ensure they maintain a strong relationship with the manufacturer. Furthermore, the bonus payments they receive may make it a good financial decision to register the car to themselves before selling to the customer, depending on the amount they receive for hitting targets.
As soon as the car is registered to the dealership, it becomes a used car even if there is negligible or no mileage on the clock. Due to this, the price of a pre-registered car is generally lower than the list price of a brand new equivalent, meaning that as a car buyer you can save money.
As the car has already been bought and registered by the dealer, you don’t have to wait for the car to be built and delivered like you would with a factory order. As such, you only have to wait for the dealership to transfer over the ownership with the DVLA before you’re allowed to drive away.
Lastly, it is likely that the dealership will want to offload a car that is sitting on their forecourt and depreciating in value. Therefore, you may be able to negotiate a better deal than if you were buying a new car and get additional extras from the dealership to secure your business.
The main disadvantage is that you are the second owner of the vehicle on the registration document (V5 document). This ultimately has a negative impact on the resale value of the vehicle when you’re ready to sell, due to the car technically having two owners rather than one. This may be offset by the discount you are likely to receive when buying the car, but it’s something that will need to be calculated on a deal-by-deal basis.
Another thing to be aware of when buying a pre-registered car is the manufacturer warranty begins when the car is registered by the dealership, not the date you purchase the car. This means that you have a reduced warranty period, which could potentially be months if the car has been sat on the forecourt for that amount of time. For new cars that come with other additional benefits, such as breakdown cover, this will also be reduced.
The other main disadvantage is that you can’t choose the spec of the car, as you would be able to if you placed a factory order. Therefore, you may have to compromise on the colour, trim and additional extras in exchange for the discount.
Dealers may want to sell pre-registered cars before the plate changes in March and September, so the chance of deals arising at these times may be more likely. You may also get a better deal on a pre-registered car at the end of a quarter, where the dealer may have to sell cars to hit targets, resulting in reduced prices for their existing stock.
An ex-demo car (otherwise known as ex-demonstrator) shouldn’t be confused with a pre-registered vehicle. These cars may have been driven on the road to drive around customers, provide test drives and transport staff at the dealership. As such, an ex-demo car will often have higher mileage than a pre-registered car, and the possibility of damage occurring whilst it’s being driven is higher.
Dealers often choose top-spec cars to use as demonstrators, with fully loaded options, to persuade customers to buy. Therefore buying these cars could land you with a high specification car without the additional costs if you were to buy the same car new. Any damage or faults on the car could also be used as a negotiation tool to lower the price further.
Buying an ex-demonstrator car could be a good option if you want to drive a new or nearly new car, and don’t mind not being the first keeper on the registration document. You should also consider that you won’t be able to spec the car, so will have to keep your options open and see what the dealership has available.
However, you shouldn’t commit to buying an ex-demonstrator before comparing the price to the equivalent factory order. The manufacturer could be offering incentives such as deposit contributions, 0% finance, discounts or free insurance, which makes the price of both the same, in which case it makes sense to order a new vehicle.