How to buy a reliable car for $3,000 – $4,000 is a guest post written by Dennis LeMire, President/Owner LeMire Consulting. Dennis is the auto broker that helped my family and me buy our paid-for-in-cash Toyota Sienna earlier this year.
People often ask us to help them save money when buying a new car. One of the things we suggest is to look at cars that are 2-3 years old with low miles. These vehicles have already taken the initial depreciation and are usually well maintained. However, not everyone can afford that price range of car. The next question then is, “Is it possible to find a car that is around $3,000 and reliable enough to last 3-4 years while we save for the newer car we want?” We think so, and we have some tips to help you find it.
Where to Find Used Cars
Craigslist is currently the most popular place for used car listings. It is free to use for both buyers and sellers. Craigslist is a great resource, but also a huge time sink. Most sellers do not have all of the information you need to decide whether the car is a good buy or not within their ad. You end up making follow-up phone calls or emails to get more details. So, using Craigslist is going to take some time. We have a used vehicle checklist on our website that will help you get some of the information you need.
As a word of warning, there have been many situations where crimes and even violence have happened when people respond to Craigslist ads. Please make sure you are safe. Arrange to view vehicles in well-lit pubic places versus someone’s private home. If the seller isn’t willing to meet you in a public place, move on to the next vehicle, no matter how good the deal looks.
Alternatives to Craigslist
I find many vehicles on Craigslist that are worth looking at, but that isn’t where we find some of the best deals in this price range. Other ideas for sourcing lower-priced cars include the car on the side of the road with a “For Sale” sign; in my experience these are often worth the time and effort in stopping to inquire. Let your personal network of contacts know you are in the market can turn up some great finds; this is especially easy now that you can simply update your Facebook status with a request for any leads on $3,000-$4,000 cars.
One other place to look is large new car dealerships. Large dealers often get this price range of cars as trade-ins. Typically, they sell them wholesale to a smaller used car dealer. If you can purchase the car at a wholesale price, or even a little more, then you can get a great deal.
Determining Value Beyond The Blue Book
“Blue Book value” is a phrase thrown around a lot by dealers, buyers and sellers. Typically they are referring to the value stated in the Kelley Blue Book. Kelley Blue Book is a consumer-driven source for values that can be a good guide to you. But Kelley is not the only source for establishing car values.
Edmunds.com is another free resource that provides a True Market Value based on their research. NADA Guides and Black Book are other resources, but I don’t think they provide reliable private party values and instead are a better resource for dealers.
No matter which guide you use, remember that it is just a guide. The actual value of the vehicle can change based on location, availability and condition.
(Carrie here: We sold a 1996 Toyota Camry a few months back for more than the Kelley Blue Book value because it was incredibly well-maintained and we had invested a lot in preventative maintenance and part repair.)
The best way to find the value of a vehicle is to do a little market research in your buying area. If there are 10 similar vehicles selling for the same price, that price should become your baseline value, even if it is a little more or a little less than any guide specifies. Keep records of your research so you can show them to a buyer as you negotiate the price.
Negotiating the price of a vehicle is a tricky area and entire books have been dedicated to the subject. Keep these five things in mind to get the best price possible for your new-to-you used vehicle.
Don’t be in a hurry
If you are under pressure to buy a vehicle right now, then you will likely accept a higher price than you would otherwise. If you can, plan ahead enough that you can shop for a car over the course of a few weeks when the luxury of time will allow you to wait for a great value.
Ignore the asking price
I know it sounds harsh, but you can’t base the value of a vehicle on the seller’s price tag. Your independent research, as described above, should guide your sense of a vehicle’s value.
Share your research
Be confident in showing a seller the research you have done on similar vehicles in the same area. The final price should be based on fact not emotion or on the seller’s sentimental value of the vehicle.
Identify vehicle problems
When you look at the car bring someone with you to take detailed notes. Jot down any potential problem areas of the car including dents, big scratches, rust spots, broken glass and mechanical issues. I believe any used vehicle you purchase should be inspected by a trusted mechanic before you purchase it; it is an upfront cost, but could be a large money-saver. Any issue may detract from the value of the vehicle.
Keep margins in mind
Lower-priced vehicles have a smaller margin for discounting. Whereas a 4% discount on a $25,000 vehicle is $1,000, that same 4% discount on a $3,000 car is $120. If the vehicle requires a significant adjustment based on your research and the car’s condition, then it is time to move on to the next potential vehicle on your list.
Which Makes and Models are Best?
Purchasing a reliable used car in the $3,000-$4,000 range is not an easy task, but one that can be done. The more urgent your need to buy a reliable vehicle in this price range, the more likely you’ll need to flex on the make and model you select. Right or wrong, many people assume certain makes or models are more reliable than others and they dismiss the others. Carrie and her family used Consumer Reports online used car buying guide in their decision making process. It outlines which makes and models by year they rate as the best and worst used cars. The vast majority fall somewhere in between. If you can’t afford or find one of the best, then at least you know what not to buy.
In conclusion, if you buy it right and your used car lasts 4 years, you can pay yourself a car payment of $300 a month for 48 months. This would give you $14,000+ to buy a newer car when the time comes to replace the one you have.
Your turn: What car shopping tips do you have?
As the President and Owner of LeMire Consulting, Dennis helps people navigate the shark-infested waters of buying and selling a vehicle.
(Carrie here: Dennis’s services were free in February when we bought our van, but he has moved to a fee-based model since then, with a base level of service free through August 23. I still highly recommend him, since he will do the work of shopping for your vehicle, negotiating a great price [probably better than what you would get] and he provides a mechanical inspection for each vehicle.)