4 Tips for Buying a $3,000-$4,000 Used Car

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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

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 BookKelley 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 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.)

About Carrie Rocha

I am passionate about helping people live within their means so they can get out and stay out of debt. I live in Minneapolis, MN with my husband and two little girls.

Comments

  1. SarahBeth says:

    Some credit unions will also help you find a car/do the shopping for you. An extra perk for being a member.

    • First off, thanks for allowing me to be a guest writer on PYD Carrie! It is a huge honor for me.

      SarahBeth- Credit Unions and Banks often do offer services via an auto broker. When we helped Carrie and Marco purchase their van, we were considered a broker based on us being paid by the dealers we brought business to. The brokers that Credit Unions work with can be a great resource, however, I am not sure I would call it a perk of being a member. Those brokers get paid for doing what they do, most of the time they are a dealer themselves.

      The reason we changed from a broker to working for our customers, was to take out the last few barriers that were limiting how much we could save our clients. When using a broker, or someone like our company, I think it is important to ask yourself – "Who are these people working for?" The answer can only be one of two people: the dealer, or you the customer.

  2. I was able to use Craigslist to find a fabulous car on the first try!!!! We did go to the person's home in Maple Grove, but we arrived with 3 of us in our vehicle so no funny business could go on. We were looking in the $2,000 price range for our son, we found a 1995 Bonneville with 60,000 miles on it and offered them $1500, they took it and we have had the car for 1 year now with no problems at all……truly a great find!!!!

  3. Having a mechanic look at a used car is a must do in my book. Last year we looked at a very clean looking Jeep at a good price. However, after our mechanic looked at it, we decided not to buy it since it was going to need close to $2,000 in maintenance work/repairs. The Saturn wagon we bought in 2007 that got a clean bill of health from our mechanic hasn't needed anything beyond general maintenance. The Mazda MPV that we bought in 2002 and didn't have checked wound up costing us as much as if we'd bought it new. Live and learn. And we always check Consumer Reports.

  4. I bought my first two cars off Craigslist. This was over 3 years ago, as I am now 21. My parents helped me check it out when we went to go meet with the people who were selling them and they dealt with all the financial stuff, so sorry, no advice on that.

    My current car though, was also through a listing on Craigslist, but it was a little local car place that used to be in Elk River. Nice place, car was in great shape. So price was a bit higher being a dealer of course. But we got them down I believe about $400. My boyfriend who is a mechanic (a good bonus in this situation) checked out the car also.

  5. I recently used Dennis to find a vehicle for me and my wife. We didn’t have the time to do all the leg work that normally comes with finding what we wanted. First and foremost, we could not be more happy with the service he gave us, but we got a vehicle that we felt was perfect for our family, at a price we were happy with. Paying for this service was the best money I have spent in a very long time.

    The thing that impressed me the most was that Dennis did not push us to buy something we didn’t want. We did not have a specific vehicle in mind, but we knew we wanted an SUV. Dennis asked us some questions regarding what we would be using it for (we tow a rather large ski boat), and helped us get a vehicle that would not only allow for us to pack our kids, and all of our stuff, but tow the boat with no problems. It is something that I would not have thought about when searching for what we wanted.

    I highly recommend anyone to give Dennis a call and see what him and his staff can do. As he told me in our initial conversation, "if you can go and find a better deal, I may have a job opening for you!"

  6. I was surprised not to see Carsoup.com listed. I highly recommend it as a great place to find a ton of listings where you can compare similar listings.

  7. valerie says:

    I just paid off my 2008 Hyundai Accent, kelly blue book says it is work around $8,000. Was thinking of selling it and getting two $4,000 cars instead. Have been doing the Dave Ramsey debt snowball and have paid off several credit cards besides the car. any comments?

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