Buying a Used Car for $5, 000 #auto #interest #calculator

#buying a used car

Buying a Used Car for $5,000

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Shopping for a $5,000 car isn’t plumbing the bottom of the market, but it’s pretty close. Unlike the search for newer used vehicles, the emphasis here is on correctly assessing the mechanical condition of the car: Some cars advertised for $5,000 will be in terrible shape and not worth considering; others will have plenty of years of service left. It’s up to you to tell the difference. While there are no guarantees of how long the car could run without requiring major repairs, using vehicle history reports and getting a pre-purchase inspection can speed the search and help you find a gem.

If you have even less money to spend, see Buying a Used Car for Under $2,500 . And, for a general description of the process, read 10 Steps to Buying a Used Car.

What To Expect

Most cars in this price range will have from 100,000-150,000 miles and are likely to be at least 10 years old. While the cars might have scratches and dings, the bodies should otherwise be clean, with no serious accidents. The interiors of these cars will show signs of wear, particularly the driver seat. But if they’re well cared for, cars of this age can be remarkably clean.

It also helps to understand the markets in which you will be shopping. Some new-car dealerships’ used-car departments won’t sell cars in this price range. However, independent used-car lots will carry many such vehicles. Of course, many $5,000 cars will be available from private-party sellers as well.

Choose Three Target Cars

If you know exactly what car you want, that simplifies the search. But if you are only seeking reliable transportation, it’s better to choose three cars of similar make and model. If you look for popular brands, such as Toyota and Honda, expect to find only older cars, with more miles, in your price range. Cars from Mazda, Nissan and the domestic automakers, while still reliable, will be newer, with fewer miles, and will cost less. For more ideas see our Best Used Cars list.

Most used-cars listings, such as the ones on can be filtered to narrow the search, saving you time and legwork. Begin by setting your search for cars with less than 150,000 miles priced at less than $6,000 if the search engine you are using allows. Your goal is to bargain the seller down to within your price range. It’s also good to start local, so set your search radius to 10 miles. If you don’t see what you want, gradually expand the distance. Build a list of candidates before you take your next steps.

Review Pricing

Once you have some possibilities, appraise your choices using the used car appraisal tool. This will show you Edmunds’ True Market Value (TMV ) for the cars. Assume that asking prices in the ads will be about $500 higher than their actual value. If the price is much higher than TMV, you might want to reject the car; the seller probably has unrealistic expectations of its value. If the price is much lower than TMV, it might indicate there is a problem with the car, possibly that it has a salvage title. Proceed with caution.

Vehicle History Reports

Using the vehicle identification number (VIN) in the ad, run a vehicle history report (the two biggest companies providing these are Carfax and AutoCheck ). Do this before going to see the vehicle or even calling the seller. The report will tell you if there is a salvage title on the car or if there were any serious problems in its past. In some cases, the report will even show the car’s service records.

It’s not unusual for cars of this age to have been involved in at least one minor accident. However, if the accident was years ago, and it has been driven many miles since then, it isn’t necessarily a problem.

Contacting the Seller

Assuming that the vehicle history report is good, it’s time to contact the seller. If the vehicle is being sold by a private party, it’s always best to speak with the seller on the phone first. The conversation may give you a sense of how the car has been maintained. However, this can be difficult because, at least initially, many sellers prefer to email or text.

When you reach the seller, verify the basic information in the used car listing: year, make, model, number of miles and condition level. If the seller is patient and has time, ask for the information in this questionnaire. While you don’t want to negotiate until you’ve seen the car, you can ask if there is any room for flexibility in price.

Test-Driving and Inspecting Used Cars

Evaluating used cars breaks into two main considerations. First: Do you like the car? Second: Is this car in good condition? Since you will have the car inspected by a mechanic, you job now is really a pre-inspection: Is it worth paying to have an expert look at it?

Before driving the car, do a walk-around to check for body damage, dings and scrapes. Open the hood and make sure there are no leaks or sprays on the underside of the hood lining that would indicate a burst hose or fluid leak. With the engine running, listen for noises that might indicate a mechanical problem. On the test-drive, check for acceleration, handling and braking. After the test-drive, ask the owner or dealer for maintenance records. For more on what details to look for, read How to Test-Drive a Car.

If you like the way the car drives, you should have it inspected before making a deal. A pre-purchase inspection costs from $75-$100 but it can save you thousands of dollars. A private-party seller will probably allow you to do this without much resistance. But at an independent used car lot, you might get some resistance.

Make a Deal

In the $5,000 range, there is a smaller window for negotiating than on higher-priced cars. If the car is priced near TMV, then your negotiating window is only about $500. Negotiating with a private-party seller can be a quick and fairly relaxed process. Negotiating with a used-car salesperson might take longer because you’re dealing with a professional. Make an opening offer that is low, but in the ballpark, based on TMV.

Before money changes hands, request the title (sometimes called the pink slip) and have the seller sign it over to you. Rules governing vehicle registration and licensing vary from state to state, so read How To Close a Used Car Sale .

Making It Your Own

If you have some money left over after buying and registering your used car, you can set it aside for any unforeseen repairs that might arise. Alternately, you could consider proactively buying a set of tires or a new battery, as we did in the Debt-Free Car Project. With these items replaced, you can breathe a sigh of relief and begin to enjoy a well-vetted, reliable bargain car.

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