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I'm considering buying a demo Toyota car that has 1500km (or slightly more) and getting 2.9% off the full price or buying a new car.

Which would be the better deal, New or Demo car?

It depends what you are after really if you are particularly picky choose new, if you can look past the odd minor mark from prior use the saving could be worth it.
The discount you have been offered on a new vehicle is enticing particularly for Toyota.