Five Surprising Tips for Buying a Used Car on a Budget

If you are considering the purchase of a gently-used older car — perhaps something like the 51k-mile Mercedes-Benz S-class pictured above, which originally stickered for sixty grand but recently sold on eBay for just $5300, or even just a practical family hauler that you plan to drive until the wheels fall off — congratulations. You are well on your way to eliminating from your budget the costliest of all car ownership expenses.

However, there’s more to buying an older car than just forking over some cash and autographing the title. While you won’t be signing up for staggering new car payments or steep depreciation, you will have to navigate a few other pitfalls inherent to a taking on a second-hand vehicle.

So before you click Buy It Now on that oh-so-tempting auction, take a moment to consider these five important — and perhaps surprising — guidelines. They will help to ensure that you end up with a car which is not only cheap to acquire but also a joy to own and drive for many years to come.

1. Budget Like a Zen Buddhist

Our approach to budgeting a used car purchase is simple, effective and fairly Zen. Take a look at your savings account and consider how much cash you would be totally comfortable withdrawing today and then tossing to the wind. Because, let’s face it, outside of collector circles, cars are not investments. They are simply purchases, not unlike a pair of jeans, albeit pricey ones. You’re going to wear them for a few years, and if there’s any value left when you’re done, that’s great. But you shouldn’t be expecting anything. And if they happen to get ruined in the wash, oh well.

So whatever the amount is that you can envision fluttering away lazily on the breeze while you feel practically zero urge to rush after the bills, grabbing wildly, consider that to be your overall budget. Even if it’s just a few thousand bucks, that’s okay; there are plenty of great buys out there at that price point.

Don’t have a savings account? Then you probably shouldn’t be buying a car right now. Sorry.

2. Set Aside $2500 for Post-Purchase Expenses

Some people make the mistake of putting a bunch of money into a car just prior to selling it, cleaning it up and fixing everything that’s broken before handing it over to the next owner. You should do the opposite. Put money into the car before you start driving it, and then enjoy the benefits of that investment for years to come. 

This is one of the unexpected joys of taking on an older car: fixing any little issues that previous owners had neglected, fitting new tires, maybe upgrading the wheels — even just hiring a good detailer to buff out the paint. It helps to make the car feel like it’s truly yours now. And, somehow, the car seems to appreciate it, too, returning the love by offering back surprising new levels of refinement, style and verve.

So take the total amount you determined in step one (above) and divide it in two: half for the actual purchase of the car, the other half for getting the car fully sorted after you buy it. If you don’t split the amount precisely down the middle, set aside at least $2500 for all post-purchase expenses. And more is better because whatever you don’t spend right away you can stash away for any unexpected bills that you may face in the future.

A full service history is always a good sign.

3. Buy the Expensive One, Not the Cheap One

Oddly enough, the smart approach when shopping for an older car isn’t to go bargain hunting — i.e. picking any car you like and then seeking out the cheapest one. It’s actually kind of the opposite: you pick a model you can easily attain and then go looking for the very best one out there, even if that means paying a bit more than market average to get it.

Let’s say you have $10,000 to spend on a sports car. Sure, a Porsche 911 would be great, but you shouldn’t be shopping for one at that price point because the only examples you’ll find are going to be wrecked or badly neglected. Instead, shop for models where $10,000 buys you the nicest one on the planet — so, in this case, perhaps a second-hand Miata or even a late C4-generation Corvette.

With cars, it makes more sense to buy the best one you can find rather than a fixer-upper. That’s because (excepting serious collector models) the cost of bringing a neglected example back up to snuff far outweighs the value added.

One of the better buys I ever made was a 1991 Mercedes-Benz 300E with just 59k miles. The owner was asking $7500 — top dollar for a basic W124-series sedan. However, over the prior two years, he had spent nearly $14,000 at the dealer to make the car basically perfect. I nabbed it for $6500 and then drove it for 30,000 problem-free miles before selling it to a friend when I got the itch for something new. Honestly, I probably should have never let it go.

That brings me to another benefit of buying a pristine specimen. When you do finally decide to sell it, you’ll have a much easier time because a nicely-kept older car is the exception, not the rule, in the marketplace and therefore commands far more serious demand.

4. Find a Good Mechanic Before You Start Shopping

Don’t wait until your car needs work to start looking for a good mechanic. That’s a rookie mistake. You should complete this important task before you even start browsing craigslist. That’s because you’ll need someone you trust to conduct a pre-purchase inspection (PPI) for any offerings that you’re seriously considering. You’ll also, of course, want to avoid finding yourself the proud new owner of a car that nobody in town knows how to work on.

So if you haven’t already identified a few well-regarded wrenchers in your area, now is the time to do so. It means thousands of future dollars not wasted on sub-par purchases and/or botched repairs.

5. Start Saving Now for the Next One

Since you are buying this car with cash in hand and thus freeing yourself from the indentured servitude of a car loan, you’ll soon be enjoying a little extra spending money every month. That’s awesome. But instead of blowing it all on Starbucks, siphon off at least a piece of the action each month into the rainy day car fund that you set up in step two (above).

You’re looking at a $15,000 bankroll in five years.The average new car payment in the U.S. is now over $500 according to Experian. If you set aside just half that amount each month, you’re looking at a $15,000 bankroll in five years for your next purchase — plus whatever you can get for the car you’re buying now, which, assuming you maintain it properly, won’t be a whole lot less than you buy it for.

Bonus Tip: Get Help from the Klipnik Community

One final point of advice. Don’t forget to utilize the Klipnik community throughout the shopping process. You can post any listings you’re considering to our Used Car area for the members there to evaluate and advise you on. Or just share your basic search criteria and let our resident enthusiasts go to work finding the best examples for you.

Once you are happily behind the wheel of your new ride, you can return the favor by coming back and doing the same for the next guy or gal.

Start the discussion at