Buying a demo car

A lesser-known option for car buyers, demo vehicles come gently used and discounted. You’re lucky if you land a deal on a quality demo car, but be prepared to negotiate. If you’re looking for a discount and are considering buying a demo car in Canada, 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.

Pros and cons of buying a demo vehicle

There are many great advantages to buying a demo car, but you should consider the potential disadvantages before making a purchase.

How to find demo cars

If you’re on the hunt for a demo car, your best bet is to head to car dealerships. That’s because dealerships often use demo cars for test drives and in showrooms, so buyers can take vehicles for a spin before deciding to purchase. These cars are gently used but you should get a third-party inspection to verify that the vehicle is in good condition.

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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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 newer for promotional purposes. These can also be vehicles that were immediately returned by customers or 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 vehicle

Sometimes, car dealers try to pass off a used car as a demo car to raise its price or sell it off faster. There’s nothing wrong with buying a used car, but it should be priced appropriately. Furthermore, if your dealer is trying to pawn off a used vehicle to you as a demo, the vehicle’s true condition might be obscured.

So how do you separate real demos from fakes? Ask how much the car has been used and by whom. If the dealership owner was driving the car and replaced it a few months later with an upgraded version of the same car, it’s 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, 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 an independent, licensed mechanic approve the vehicle, you should be able to avoid unknowingly buying a lemon.

Related: Best used car websites in Canada

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:

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How to buy a demo car in 5 steps

Follow these steps to make sure you’re actually getting a fair deal on your demo car.

Step 1: Research the car’s history

Make sure you’re actually getting a demo car by asking the salesperson how the car was used and how old it is. You can verify this by doing a quick search of the car’s Vehicle Identification Number (VIN). A VIN check gives you information about the odometer reading, maintenance and repairs, structural damage and more.

You can do this either online for a small fee or through a used car lot. Ask about anything in the history that doesn’t line up with what the salesperson told you.

Step 2: Check the car’s warranty and registration.

Also request proof of the car’s in-service date—the day that the warranty begins. Sometimes warranties begin earlier on demo cars, since dealerships are technically using them before making a sale. If the warranty starts early and there isn’t an option to extend it, you can use this as leverage to ask for a lower buying price. Don’t forget to check if the car was ever registered.

Step 3: Do it again with more demo cars

The best way to find a good deal is to compare multiple options, especially from other dealerships. Compare the asking price, financing options and history of various cars before coming up with a short list of potential cars. You can also ask for a detailed list of what differentiates a new car from its corresponding demo version.

Step 4: Inspect for damages

Dealerships typically use demo cars for test drives, which can lead to damages. When you’ve found the car you’re thinking of buying, check it yourself or have it inspected by a third-party expert for any possible damages. If you find damages that are manageable, leverage this to negotiate a lower price.

Step 5: Negotiate the price and financing

Since demo cars fall somewhere between used and new, you might have more wiggle room than you think with the price and financing. Use the research and inspections to work down the price with your dealership. You might also be able to get a better deal on financing by getting preapproved for a car loan from a third-party lender.

How to inspect a demo vehicle

Demo vehicles are relatively new, but some may have been driven off-road or have higher mileage than usual. Inspect the vehicle for any signs of wear and tear prior to making your purchase. Here’s what to look out for:

If you’re not confident, take the vehicle to a mechanic or bring a car-savvy friend to help you.

How to negotiate the price when buying a demo car

When you’re in the business of buying a demo car, you’ll need to put your negotiation skills to the test to score a great deal. Here are some factors to consider when you’re negotiating on price:

• Get familiar with the demo car’s market value. Find out how old the car is and how often the car was used. Ask if there’s any documentation to see how the car was used. Consider how the demo car’s usage compares to a brand new or gently used model on the market.
• Don’t rely on dealership appraisals. Get the car inspected by a third-party to see if it’s in good condition. Use the results to lower the price with your dealership.
• Take stock of mileage on the car. The average demo car can have anywhere from 1,000 to 10,000 kilometres on it. As a general rule of thumb, some auto specialists recommend trying to get a discount ranging anywhere from $0.20 to $0.50 per kilometre on the vehicle.
• Get pre-approved. Apply for a pre-approved car loan to give yourself a hard budget and more bargaining strength. When you have a pre-approved car loan in hand, the dealership knows you have a set amount of cash available to buy your demo car and may be more willing to work within those parameters.

How much can I save?

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 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 ask your dealer about these types of discounts when 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

• Are demo models worth buying?

  Buying a demo car comes with risks, but there are benefits too, like potentially saving thousands of dollars on a car that's in good condition (and possibly comes with upgraded features). You might buy a demo car if the model you want is hard to get.

  Make sure you get the car independently checked to verify its true condition. Use the results to negotiate the price and get the best possible deal.

• What discount-per-mileage discount should I look for when buying a demo car?

  If you're buying a demo car, some auto specialists recommend negotiating a discount of $0.20 to $0.50 per kilometre, or around 15%-20% of the MSRP for a brand new model. You can also check used car websites to see what similarly used vehicles sell for.

• What is the typical mileage on a demo car?

  The average demo car usually has anywhere from 1,000-10,000 kilometres on it. If a demo car has higher mileage than this, check its condition and usage very carefully. It might be better classified as a used car and priced accordingly, but your dealer is trying to pass it off as a demo vehicle to make more money.

  You can also run a VIN check to verify if the vehicle has been registered before by a prior owner/driver.