Ok, so here's the scenario. You have to buy your kid a used car to go back and forth to school. But with cash flowing the way it's been lately, the best you can do is come up with $500 for a down payment and $250 a month as a payment on this car.
Although to do it, you're going to be operating in the netherworld of the extremely low priced used car. To be exact, you'll be looking for a car priced around $5000. Given the old adage, 'you get what you pay for', at this point, you're probably wondering if you can even get a reliable car for so 'little' money.
Yes you can. It will take a bit more effort and patience though.
With prices this low, we're talking about cars that had really low retail prices to begin with, or cars that are considerably older. To learn where you fall in this spectrum'”particularly if you need to finance the purchase'”start by finding out what is the oldest car your financial institution will finance. In the case of really older cars, you'll find lenders generally don't want the risk.
Once you determine what you can get a loan against, consult a pricing guide like kelley blue book to get an idea of the going prices of cars in your target's age range. This way, you'll know a good deal when you see one. BTW, odds are the most reliable cars are not going to be sexy. If your kid has their heart set on tooling back and forth in a two-seater, pickup trucks are likely the best place to start. And yeah, we know that probably isn't what they had in mind when they said two-seater. The point here is you're going to be looking at cars the vast majority of people find somewhat under-desirable. That's why their prices are so low.
OK, so once you know what you're after, the best place to start looking is among your circle of friends. Ask if any of them knows of someone with a car for sale. Similarly, your trusted local mechanic is always a good person to check with. They often know good, clean cars for sale. Classified ads and private party used car Web sites are good too. Notice we're not suggesting retailers. Your best bet in this price range is, in all likelihood, going to be a private party sale. The private party's desire for profit is a bit more bridled than at a lot, and private parties generally are more forgiving negotiators. The 70-year old lady whose husband just died and left behind a Toyota Corolla is likely to want to just part with the car. She doesn't have a sales manager demanding she rake you over the coals for every nickel of gross she can get out of the deal.
Shopping in this price range, taking your time and looking at a lot of cars is of absolute importance. You might get lucky. The first car you run across might be a gem. And, by all means, if you get that vibe off of it (it's running smoothly, the interior is nice and clean, the steering and brakes feel sharp and secure, the suspension is tight and quiet, and the body's in good shape) take it to a mechanic you trust and get it checked over from bumper to bumper.
More likely though, you're going to have to wade through a bushel or two of lemons before you run into the peach. However, the good news here is after wading through all those lemons you will recognize the peach when you see it. By looking at so many cars and seeing so many problems, you'll gain an understanding of what to look for overall.
The point here is you can get a decent used car for $250 a month'”if you put in the time and effort to search it out. Take your time. Don't put yourself (or let your kid put you) under pressure. That's how people blunder into bad deals. And always remember, under no circumstances should you ever buy any used car without having it inspected by a trusted professional mechanic'”one very familiar with that make and model of car.