Demo car buying guide and checklist

How to score a bargain on a car without getting blindsided.

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Looking to save on your next vehicle but worried about the reliability of used cars? A demo car might be your answer. A lesser known option for car buyers, demo vehicles come gently used and at a discounted price compared to brand new vehicles.

Landing a deal on a good-quality demo car can make you one lucky buyer, but it’s important that you come prepared with the right know-how to negotiate. If you’re looking for a discount and are considering buying a demo car or vehicle, you’ve come to the right place – we’ll tell you what you need to know about demos and how to get rolling in one faster.

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  • Loan Term: 12-84 months
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  • Min. Loan Amount: $7,500
  • Max. Loan Amount: $55,000
  • Interest Rate: 3.99% to 29.90%
  • Loan Term: 12-84 months
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What’s a demo car?

Also called a demonstrator vehicle, this is a car that executives, customers or sales people have driven for brief periods of time for personal use or simply to test drive. These cars have low mileage – often only a few thousand kilometres – and tend to be in great shape. Because demos have been used to make sales or to drive execs around in style, they may come with some nice upgraded features and add-ons.

Demos are considered “new” vehicles because they have never been sold or registered. Once a vehicle has been registered, it officially becomes “used.” But despite being new in status, demos are discounted to reflect their slight use and to get rid of them in order to make room for new demo vehicles.

Pros and cons of buying a demo vehicle

There are many great advantages to buying a demo car, but there are some potential disadvantages as well that you may want to consider before making a purchase.

Pros

  • Qualifies for special offers and rebates
  • Qualifies for new car warranty
  • Low mileage and less wear and tear than many used vehicles
  • If used by dealership employees, then the car may have been handled more carefully to comply with dealership rules such as no pets and no smoking
  • May come with upgrades and added features

Cons

  • Pre-existing mileage may be considered usage under the new car warranty (depending on the car’s in-service date), which would lessen the coverage you get
  • May have been more heavily used than the dealer advertises (especially if driven by many different people)
  • Cannot choose your colour or features
  • No used-vehicle records exist to verify the car’s true condition
  • Many experts say that demo cars are not sufficiently discounted to be worth purchasing

Where can I find a demo vehicle?

Car dealerships are where you should head to in order to find a demo car. Check prices on sites like the Canadian Black Book or autoTrader.ca to get an idea of current market prices. These comparisons can give you bargaining power when it comes to negotiating the vehicle price.

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Name Product Min. Loan Amount Interest Rate Fees Loan Term Min. Credit Score
Car Loans Canada
$7,500
3.99% to 29.90%
Varies by lender, loan type and province
12-84 months
300
Search thousands of vehicles online, including $0 down options, from dealers across the country and get matched with affordable financing options. Auto loans are also available to those with bad credit, consumer proposals and bankruptcies to help rebuild credit.
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$500
4.90% to 29.90%
Varies by lender, loan type and province
12 months - 8 years
300
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$500
1.90% to 46.96%
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6-60 months
550
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Carloans411 Car Loans
$500
1.90% to 19.99%
Varies
Up to 84 months
300
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Auto Arriba Car Loans
$3,500
8.99% to 29.50%
Contract fee of $499.00
6-84 months
N/A
Auto Arriba offers car loans starting at $3,500 up to $100,000, with as little as a 30 minute loan turnaround time. On a limited number of approved loans, Auto Arriba is currently offering a rebate of the amount of your first scheduled payment 30 days after it has been processed up to a maximum of $500.
Fairstone Secured Personal Loan
$5,000
19.99% to 23.99%
Varies by province
3-10 years
560
Fairstone offers secured personal loans up to $35,000.
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Types of demo cars

Before you figure out your finances and run to buy a demo car, make sure you understand what you’re buying:

  • Older models. These are discounted cars that need to be cleared out before new stock arrives. The vehicles usually have less than 10,000 kilometres and can come with discounts for light wear and tear.
  • Dealer demos. These cars are sometimes used as loaners for customers and they’re usually the newest models to help promote them. These can also be vehicles that were immediately returned by customers or even cars from canceled customer orders.
  • Factory demonstrators. These vehicles are used in promotions or sponsored events and are sent back to the dealership to sell for a bargain price.

How to spot a fake demo car

Two men inspecting a vehicle Image: skynesher/Getty ImagesSometimes, car dealers try to pass off a used car as a demo car to make more money off of it or to make the car look more attractive to buyers so that it will sell faster. There’s nothing wrong with buying a used car, but a used car should be priced like a used car. Furthermore, if your dealer is trying to pawn off a used vehicles to you as a demo, he or she may be obscuring the vehicle’s true condition.

So how do you separate real demos from fakes? Ask how much the car has been used and by whom. If the owner of the dealership was driving the car, but then replaced it a few months later with the same type of car but customized with fancy upgrades or special rims, then the vehicle is not likely being sold because of overuse or hidden damage.

Similarly, if the dealership formerly used the car as a test vehicle, but then a new model of the vehicle rolled out and the dealership wanted to show that model to prospective customers, then it makes sense that they’d want to sell off the old demo. The lack of used vehicle records for demo cars can make identifying a fake demo a little challenging.

But by asking the right questions, test driving the car yourself and having a licensed mechanic from an outside shop look the vehicle over and give it a seal of approval, you should be able to avoid unknowingly driving off the lot in a lemon.

Should I buy a demo car?

Demo cars can help you save but it’s not always a great choice. Here’s when you might buy a demo car and when you might not:

Consider a demo car if…

  • You’d rather have an unregistered car
  • You don’t mind a car that has some mileage on it
  • You’re comfortable negotiating

Look elsewhere if…

  • You can find a better deal on a used car
  • You’re bothered by the vehicle’s wear and tear
  • The price is the same as an un-driven, brand new car

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7 tips for buying a demo car

  • Find out how old the car is and how often the car was used. Ask if there is any documentation available to see how the car was used.
  • Check if the car was ever registered.
  • Ask for a detailed list of what differentiates a new car from its corresponding demo version.
  • Always negotiate the price of a demo car — you’ll be surprised how much of a discount you could get.
  • Get the car inspected by a third-party car expert such as a mechanic to feel confident that the car is still in top condition.
  • Apply for a pre-approved car loan to give yourself certainty over your budget and more bargaining strength with the dealership.

How to inspect a demo vehicle

Demo vehicles are relatively new, but some may have been driven off-road or have more kilometres on them than usual. Inspecting the vehicle for any signs of wear and tear is important prior to making your purchase. Here’s what you should look out for:

  • Listen for to the engine for any strange noises.
  • Check the quality of the tires.
  • Ask if the vehicle has been in any accidents.
  • Look for scratches and check the paint quality.
  • Check the battery life.
  • Check the lights, radio, windshield wipers to ensure that everything functions properly.

If you’re unsure of what to look for, take the vehicle to a mechanic or bring a friend who is car-savvy to help you.

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How much can I save with a demo vehicle?

Discounts on demo cars can vary based on each car’s features, what it was used for and how many kilometres it has, but often you can get thousands of dollars knocked off the new car price right away.

Some dealerships offer a percentage discount on demo vehicles based on the MSRP (manufacturer’s suggested retail price) of new models. Such percentages may run around 15% – 25%, or the discount may be set to reflect the average depreciation of a car’s value over its first year of use. For a $30,000 vehicle, that could mean a discount of $4,500 – $7,500.

Alternatively, some dealers offer a flat percentage discount per month the car was used, often between 1% and 3%. Others offer a flat discount on the mileage. If this is the case, then look for a discount of at least $0.25 – $0.55 cents per kilometre that the car was driven. For cars driven 5,000 km, that would mean a savings of $1,250 – $2,750.

Many dealers are willing to waive freight expenses and other miscellaneous fees for demo cars, so be sure to ask your dealer about these types of discounts while negotiating the price.

Compare the new vehicle sticker price to see how much you’re saving with the demo vehicle. Demo cars can be a great option and help you save when purchasing your next vehicle, but they might not be the right choice for everyone, so be sure to look around and avoid making a hasty buying decision.

Need help paying for your next car? Find out about the best car loans in Canada here.

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Frequently asked questions

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