The Truth About Pre-Registered Cars

Tuesday, 9. November 2010

Hi, Graham Hill here, thank you so much for visiting my blog, I hope you learn a lot and as a result end up driving a great car. In order to do so you can get all the information you need by buying my book, An Insider Guide To Car Finance or use me to finance your next car. Happy driving.

I was talking to a client recently after he had been to a dealer for a test drive. Whilst there, he was shown a ‘pre-registered’ car that had just 10 miles on the clock and was £3,000 less than the list price. He was interested in the car and asked my advice and as this is quite a common occurrence I thought I would share the facts with readers of my blog. First of all there is no such thing as a pre-registered car with respect to dealers. This was made illegal by Stephen Byers at the time he was Trade & Industry Secretary. You may recall he shook up the new car market by insisting that manufacturers reduced their prices to bring them in line with Europe. At the time the Government issued the Supply Of New Cars Order 2000. Within the new rules it prevented manufacturers from falsifying registrations by forcing their dealers to register cars in their own names whilst offering incentives, through additional discount, on the cars.

Manufacturers are still able to pre-register cars but must declare the numbers registered each year through the SMMT and there is a restriction as to how many cars they can pre-register in a year. So what are these ‘pre-registered’ cars being offered by dealers, they are either car that have been registered as demonstrators or the dealer has set up a daily rental division which buys these cars under the daily rental terms from the manufacturer, receiving anything up to 45% discount and bonus. Under the supply terms the daily rental division is supposed to retain the cars for a minimum period, normally 3 months, 4 months or 6 months or a minimum of say 5,000 miles. So is this legal? Strictly speaking no because dealers are selling these cars immediately but just in case they receive an inspection from the manufacturer they retain the registration documents until they would normally be able to sell the car. As the manufacturer sells more cars he will generally ignore the practice unless they receive a complaint. When you buy the car you become the registered keeper and the car must be registered in your name, if this doesn’t happen it’s illegal.

Some funders won’t finance a used car unless they or you have been handed the V55 registration document. You will also find that having the first owner as a rental company will drop the likely resale value of the car when you come to change it. You see how messy all this can get and has title actually passed if the dealer has sold the car whilst still contractually owned by the daily rental company? My recommendation is to think very carefully before buying a ‘pre-registered’ car. By Graham Hill

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One Response to “The Truth About Pre-Registered Cars”

  1. Rob Chisholm Says:

    Yes, title has passed based on the invoice. A V5 Registration Document does not confer ownership or title, it just declares who the Registered Keeper is.

    But I agree with the main thrust of your argument – this being that the manufacturers and others colluding with them are essentially ignoring the Supply of New Cars Order 2000

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