If you’re in the process of buying a car, you may be offered a pre-registered model. These are new cars that are registered by a dealer in order to add sales to their own quarterly or annual results, to improve their reporting figures at the time. These new cars are then sold on to customers at a much lower price, which can represent a fantastic saving. However, it does mean that the car is technically second hand, despite having no (or low) miles on the clock.
Pre-registered cars exist because car salespeople and dealerships get bonuses from the manufacturer for meeting their sales targets. Therefore, the dealership decides to buy cars in bulk, if they think they can then sell them on as pre-registered models over the next quarter or so. And the bonuses that the dealership gets for these extra car sales then offset the discounts that are then applied to the car.
So everybody wins, right? Well, it largely comes down to whether you plan to keep hold of the car for a number of years before you sell.
The advantages
The advantage of buying a pre-reg car is that it will have almost zero miles on the clock (less than 200 miles, which comes from delivery) and it will come in at a much cheaper price than a fully new first-hand equivalent. The pre-reg should be less than six months old, and the saving is typically between 5% to 15% cheaper, which could save you thousands of pounds.
However, the discount applied depends on how popular the car is, and how much the dealer wants to get rid of the stock. Very popular cars that will sell easily may will have a smaller discount, while others which aren’t selling that well may be given a huge reduction.
It’s a great choice if you want a new car, with a standard spec, but at a lower price. And if you plan to own it for several years, which will negate any of the disadvantages listed below.
The disadvantages
It’s important to be clear on what it means to buy a pre-reg. The main drawback is that you won’t be the first owner (they will) which can come into play when you sell. If you plan to keep it for a number of years it’s won’t matter, as the second-hand status won’t affect the residual value. But, if you sell the car within the first few years of ownership, then being a second owner will lower the sale value.
With this in mind, insurance can be heavily effected, in that if a new car is written off in the first year, most insurers will replace it without any issues. However, insurance for a pre-reg will be set as second-owner insurance, and as such their general valuation (based on a standard second-hand version of the car) will be much lower than what you paid for it as almost new. So, should a bad accident happen in the first year or so, the standard insurance pay-out would be less than you would want. However, getting a GAP insurance policy can easily solve this.
Another thing to mention is that car warranties begin from when a car is first registered, so if a pre-reg is sold after six months, then the buyers misses out on six months of warranty, and the car price should reflect this.
Also, if you buy pre-reg you will most likely be limited in your choice of spec and colour. As pre-reg models are usually kitted out in the most popular options and colours. Therefore, you’ll have to go with what’s most standard, or if you want actually want a particular colour or different interior, then you’ll have to buy new or look at other options.
With this in mind, it’s also worth saying that buying pre-reg also means you miss out on any finance offers that are on the table, as they don’t apply to pre-registration models. And sometimes these also offer great savings, without the disadvantages.
Demonstrators
Pre-registered cars are sometimes used for test drives, and these are referred to as demonstrators or ex-demo cars. The way that dealerships sell these models is to add on lots of desirable options and accessories, to offset the fact they’ve got some miles on the clock.
Demonstrators are also likely to come in at an even cheaper price than a regular pre-reg. So, if you’re interested in the price saving benefits of a pre-reg, then these can offer even more value.
Just look out for any minor scratches or marks that might have come from a plethora of test drives, and ensure they are rectified, or deducted from the price if you spot anything.
Compare pre-reg to other deals and discounts
While a pre-reg will save you money, manufacturers and dealerships also offer great deals to those buying new, such as large deposit contributions (also worth thousands of pounds), or other discounts. As such, if a purchase offer available on a new car works out as roughly the same for a pre-reg, then it’s a no-brainer to go for the new car at the same cost instead, to avoid these small but pertinent drawbacks listed above.
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