8 Tips for Buying a $5,000 Car

Photo (cc) by minds-eye

In my last story, Why I Don’t Buy New Cars, I offered evidence that forgoing new cars and the payments that come with them is a pretty smart thing to do because you can use the money you free up for higher purposes, like getting rich. But since standing on the side of the road waiting for a tow truck is no way to go through life, the used car buyer must be especially careful not to be penny-wise and pound foolish.

When it comes to cars, there are many versions of “used”. There’s the one-year-old car that’s virtually identical to new, with the exception that it costs 20% less. Then there’s the half-price car, three or four years old with 50,000 or 60,000 miles on it. Then there’s the car that’s the subject of this story: the $5,000 car. It’s got close to 100,000 miles on it and it’s five years old or more. It could become a reliable old friend or the worst enemy you’ve ever had.

This story focuses on the potentially most problematic, the $5,000 car, because if you can buy a reliable used car in this price range, the others will be simple to shop for.

First, watch this recent news story for the down-and-dirty, then meet me on the other side for more.

So let’s recap what we learned from that story and add a little more detail. The first thing we learned was that it is possible to find a reliable $5,000 car. In the course of researching this story I talked to three mechanics and the guy you saw, Kevin Byndloss, a professional car buyer. All four of these pros confirmed that it was indeed possible to find a reliable $5,000 car.

Here’s how I’ve gone about it in the past.

Tune up your attitude.

The more important automotive status is to you, the less likely you are to find a reliable $5,000 car. In other words, while it’s possible to buy a $5,000 Mercedes that will be trouble-free for years (I’ve actually done that and had it work out), you’re pushing your luck. When luxury cars start to break down, the repair bills can wreck your finances overnight. Solution? Put your visions of looking cool on hold and go to places like Edmunds.com used car best bets. There, you’ll find cars like the 2004 Hyundai Elantra in the $5,000 range, but no BMWs or Jags; that’s OK. You may not look hot in your Hyundai, but that’s better than sitting in a hot Mercedes on the side of the road. Check out this story about how high tech cars lead to costly repairs.

Talk to your local mechanic.

I mentioned above that I once had a reliable, $5,000 Mercedes. I found that car because I had talked to and befriended a local Mercedes mechanic. I asked him to keep an eye out for a good car at a low price and he came through for me. Mechanics are a great source for used cars, and for obvious reasons; they’ll often know the condition and service history of a car. Definitely the best source for a good car, especially if you’re not in a hurry.

Avoid car lots.

While you might find a great car at a car lot, I avoid them for three reasons, especially when seeking out an inexpensive car. First, because I’ll almost certainly be outmatched in terms of negotiating skills. Second, many have proven themselves completely untrustworthy. And finally, these guys have to make a profit to keep the lights on. Nothing wrong with that, but it’s unlikely I’ll find a true bargain by shopping there. That’s why I…

Seek out private sellers, especially referrals.

A few years ago I bought a 1994 Cadillac Fleetwood Brougham from a 91 year old lady. The car had never been in the rain and had less than 40,000 miles on it. I paid $5,000 for it, drove it for two years with zero issues, then sold it in less than a week for $6,000. While it’s possible I could have gotten that same deal from a dealer, it’s not likely. Where did I find her? She was a friend’s grandmother. If you take your time and ask around, you might get lucky. But no matter what deal you find…

Check out the car yourself.

If you’re traveling this road, you obviously want to have some degree of confidence that you know a good car when you see one. This kind of knowledge comes from two sources. The first and most important is experience. The more cars you look at, the more you’ll know a good deal when you see one; you don’t have to be a mechanic. Comparing things to one another is how you gauge relative value in anything you buy, from a new house to a new pair of sneakers. If you look at 10 1992 Toyota Corollas, by the time you’re done you’re going to know which one is the best deal. You can also check out a car’s history, either by paying a service like CarFax, or checking out the free National Online Title Database: Haven’t heard of it? Check out this story on the free National Online Title Database. And remember, when you go to physically inspect a car, always…

Use a checklist.

The professional car buyer we interviewed in the news story above has personally inspected more than 20,000 cars, and he still uses a checklist to make sure he remembers to cover all his bases. There are tons of how-to articles and used car checklists online. Read some articles, download and print out a checklist and don’t leave home without one!

Here’s a used car checklist from MSN.
Here’s some advice and a checklist from Edmunds.
Here’s some information from Kelley Blue Book.

Know your values.

The older the car, the more fluid the value. This is actually one of the best things about older cars: what they’re worth is in the eye of the beholder, at least more so than with newer ones. For example, the Cadillac I mentioned above. The little old lady I bought it from had originally offered to sell it back to the dealer she bought it from, but they only offered her two grand. I was happy to pay five and the guy I sold it to a couple of years later jumped on it at six. So look at values on sites like Kelley Blue Book or Edmunds, but don’t stop there, especially when shopping older cars. Want to know what a car is really worth? Follow auctions on eBay. You’ll find the prices cars actually fetch are often much different than published “book values”. Check out a story I did a few years back called What’s your car really worth?

Don’t ever buy without a professional inspection.

You’d (hopefully) never buy a house without a professional inspection… same with cars. Use a checklist and other tools to narrow the search, but don’t ever buy without having a mechanic inspect the car first. It can cost as little as $50 and save a ton of headaches and bills down the road. Besides, if the mechanic finds something wrong (do you doubt that he will?), you can use that information to negotiate a lower price.

Bottom line?

If the question is “can I find a reliable car for 5 grand?”, the answer is “yes”, but there’s no free lunch. The older the car, the greater the risk, so part of what you’re saving in money you’re spending in time. You’ll have to shop more, you’ll have to study more and you’ll have to hire help to make sure you don’t end up driving yourself to the poorhouse.

In my opinion, it’s worth the hassle. Because as I pointed out in my last story, Why I Don’t Buy New Cars, if you’ve got the money for car payments, that money is better spent amassing tens of thousands of dollars in net worth.

And for the record, these days I’m driving an $80,000 Mercedes S420 that I bought eight years old for 20 grand; by far the most expensive car I’ve ever owned.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
12 Expenses You May Be Tempted to Claim as Tax Deductions — but Shouldn’t
12 Expenses You May Be Tempted to Claim as Tax Deductions — but Shouldn’t

Thinking of trying to deduct a few of these things on your federal tax return? That could be a costly mistake.

14 Things That Are ‘Free’ With Medicare
14 Things That Are ‘Free’ With Medicare

These services could save you money and help prevent costly health problems.

How to Save Up to 70% on 7 Everyday Purchases
How to Save Up to 70% on 7 Everyday Purchases

Stop getting sucked into paying a premium when good alternatives are available at huge savings.

7 Steps to Keep Your Car Looking Like New
7 Steps to Keep Your Car Looking Like New

Take a few steps to preserve the beauty of your car, and you stand to get a lot more money at trade-in time.

13 Brilliant Bulk-Buy Items on Amazon
13 Brilliant Bulk-Buy Items on Amazon

Every household should have these products on hand. Buying them in bulk on Amazon saves you cash.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Whether you resell it for a big profit or add it to your own wardrobe, this type of clothing is a hidden steal.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

Organize Your Home With These 10 Thrift Store Finds
Organize Your Home With These 10 Thrift Store Finds

Resolve to be clutter-free in 2021 with these secondhand purchases.

11 Laws You Could Be Breaking Without Knowing It
11 Laws You Could Be Breaking Without Knowing It

Seriously? Fibbing about the weather is a crime? This and other little-known legal traps await the unwary.

Is This Treatable Condition Causing Your High Blood Pressure?
Is This Treatable Condition Causing Your High Blood Pressure?

Researchers say too many doctors are overlooking this potential source of hypertension.

13 Things Seniors Can Get for Free — or Almost Free
13 Things Seniors Can Get for Free — or Almost Free

There are many ways to get cheap or free services and goods after reaching a certain age.

These Are the 3 Best Used Cars You Can Buy
These Are the 3 Best Used Cars You Can Buy

These vehicles boast reliability, safety and long-lasting value.

Taking a Multivitamin? Here’s Why You Should Reconsider
Taking a Multivitamin? Here’s Why You Should Reconsider

A new study has bad news for the millions of Americans who spend money on multivitamins.

This Surprise Factor Can Raise Your Risk of Dementia
This Surprise Factor Can Raise Your Risk of Dementia

Nearly half of U.S. residents may face this threat.

21 Items to Cut From Your Budget That You Won’t Even Miss
21 Items to Cut From Your Budget That You Won’t Even Miss

Start off the new year by implementing these small-but-smart savings strategies. They’ll soon add up.

This Is America’s New Favorite Grocery Store
This Is America’s New Favorite Grocery Store

Consumers say a familiar name has become their go-to source of grocery items.

Internet Providers Can’t Charge You for This Anymore
Internet Providers Can’t Charge You for This Anymore

Starting this month, your ISP no longer can bill you for this fee.

Does Wearing 2 Masks Protect You Better From COVID-19?
Does Wearing 2 Masks Protect You Better From COVID-19?

A growing number of people are wearing two masks instead of just one. Should you join them?

15 Painless Ways You Can Cut Costs in 2021
15 Painless Ways You Can Cut Costs in 2021

Follow these tips to save, so you’ll have money for things that really matter.

10 Cars You Are Most Likely to Keep for 15 Years
10 Cars You Are Most Likely to Keep for 15 Years

The cars that owners hold onto the longest have one thing in common, a new study shows.

Prepare to Pay More for These 31 Drugs in 2021
Prepare to Pay More for These 31 Drugs in 2021

More than 700 prescription medications have seen price hikes so far this year. Here’s a look at the worst.

The 10 Golden Rules of Becoming a Millionaire
The 10 Golden Rules of Becoming a Millionaire

I’m a millionaire several times over. I got here the same way you can — by following these simple steps.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.