How Can I Afford a Used Car On a Beater Budget?

Dear Dollar Stretcher,

I’d like to get a good used car without going in the poor house! We have 3 school-aged children. Our old Ford pickup doesn’t have room for them. I wanted to spend $5,000 or less and don’t want car payments. Do you have any ides where to look besides the newspaper?

Kevin S.

Buying a good used car is both easier and harder than it used to be. It’s easier because cars last longer and there’s much more information available. It’s harder because of the recession. Many people can’t afford a new car. So they’re shopping for a used one. But, as long as Kevin has enough time and is willing to research he should be able to find something that works for his family. Finding the right car isn’t just a matter of where you look, but rather knowing what you’re looking for.

He’ll want to start by finding out what models are available in his price range. At this point it’s not a matter of looking for any specific car. Just getting a feel for what’s out there. One way to do that is to check one of the websites that lists used cars.

For instance, Cars.com and other auto sites will allow you to search within your price range and local area. Fortunately there are a lot of mini-vans and SUVs that could meet your family’s needs. It takes a little time to try the different models, but within an hour Kevin can get a good idea of what models are available in his price range.

Once you have some makes and models in mind, pick the right vehicle for your needs. Consider how you use your car. If you have five people in your family, you probably don’t need a van that carries seven. The same thing with towing and hauling capacity. If you buy more vehicle than you need, you’ll spend more now and drive up your operating costs, too.

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It’s possible that the year and model you can afford will be too old to be listed on current reliability reports. If that’s the case, see if your library has a Consumer Report that’s a few years old. Obviously the information will be out of date. But it should give you an idea of the general reliability of that model in your selected year.

The quality on most cars continues to improve. That means that you’re more likely to find a reliable older car. Unfortunately, cars are also much more complicated now. So it’s harder for the average buyer to evaluate any specific car. It’s also true that much of today’s reliability is due to the use of sophisticated systems. If they should breakdown, the resulting repair bill could be expensive.

Finally it’s time to begin shopping. There are a number places to look for a car. Naturally Kevin will want to check local car dealers and read the newspaper ads (or the online version of his local paper).

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The internet is quickly becoming another good place to look. There are a number of sites that will let you search for specific makes and models near your home. One of the biggest is Autotrader.com.

Buying a car from someone you know can also work well. You’ll eliminate much of the risk of not knowing how a car was cared for. There’s no guarantee that the car will be trouble free, but inexpensive used cars always carry some risk. If your friend has already traded the car, find out which dealer they used. If you can get to them before they detail the car you might save some money.

Another place to look is retirement homes and communities. Many seniors drive mini-vans and use them very gently. You might find a low-mileage bargain when a senior is ready to hang up their car keys.

If possible, begin your search long before you need to make the purchase. That way you’ll have the luxury of turning down all but the best offers.

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Before you finalize the purchase have the car inspected. A local mechanic or repair shop like Pep Boys will do it for you. You’ll pay for the inspection. But it’s money well spent. Suppose you pay to inspect a car, but don’t buy it. You haven’t wasted the money spent. You’ve avoided a much larger repair bill. And, if you do buy the car, you really should go through it thoroughly before putting on too many miles anyway.

He might also want to check out Carfax.com. For $19.95 he can run any car’s VIN number to make sure that it wasn’t involved in a major accident, flood or other serious event.

Can Kevin find a dependable car for $5,000? It won’t be easy, but if he stays away from unnecessary frills he should be able to find something that will get his family safely from one place to another for a reasonable period of time. And avoiding a car payment should leave Kevin with some cash that could come in handy.

Gary Foreman is a former financial planner with over 30 years experience in getting value for a dollar. He currently writes on personal finance and edits The Dollar Stretcher website. You can follow Gary on Twitter.

Gary Foreman is a former financial planner and purchasing manager who founded The Dollar Stretcher.com website and newsletters in 1996. The site has an active section for baby boomers

He's been featured in MSN Money, Yahoo Finance, Fox Business, The Nightly Business Report, US News Money and CreditCards.com. You canfollow Gary on Twitter.
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