There are currently 8,300 vehicles with prices between $500 and $5,000 listed on Autotrader in Canada.sutichak/iStockPhoto / Getty Images
Cars are expensive, but they don’t have to be. If you’re willing to put in the time and legwork, you can get a good used car for about $5,000.
Some early surveys conducted in Canada, the United States, Europe and Asia suggest the COVID-19 pandemic is making cars more desirable as a means of transportation and also pushing people who don’t currently own cars to look into buying one. Since the virus hit, friends who have never owned a car, nor shown any interest in having one, have asked how to buy one on the cheap.
Unfortunately, there is no magic trick to it, no secret code. There is no right answer to the question of what year, make and model to purchase – although there are plenty of wrong answers. Short of getting lucky and finding a solid runner that a friend or family member is looking to sell, there are no shortcuts.
That said, here is how to go about buying a good cheap car of your own.
“You want the best quality for a price. You don’t want to be buying the cheapest Honda Civic you can find,” said George Iny, director of the Automobile Protection Association (APA), a national consumer-advocacy organization based in Toronto and Montreal.
Take your time. Get a feel for the used-car market in your area by regularly searching online classified sites such as Autotrader and Kijiji Autos. Narrow down the results by price, location, brand, type of seller and mileage. Setting up saved searches or e-mail alerts for relevant ads will give you a sense of the options in your budget as well as typical asking prices.
There are currently 8,300 vehicles with prices between $500 and $5,000 listed on Autotrader in Canada. It’s a candy store, overflowing with delicious possibilities. You’ll find Volvos, BMWs, Mercedes coupes, GMC trucks, sports cars with “minor damage,” Volkswagen Golfs, Jeeps and the occasional classic, such as one seafoam-green 1965 Chevrolet Corvair four-door (with matching interior). Additionally, there are another 13,500 vehicles listed for between $5,000 and $8,000.
What to buy
“Be realistic,” Iny advised. Where people get into trouble, he said, is trying to buy a $12,000 car for $5,000. Avoid luxury brands and sports cars. If the price seems too good to be true, it probably is.
What you’re looking for is a boring car in good condition. “Something perhaps driven by a senior … Something that nobody is crazy for, vehicles that are no longer fashionable,” Iny said. Mid-size and compact sedans as well as hatchbacks are a good bet, since nearly everyone seems to want an SUV these days.
Buyers can check a car’s reliability ratings in Consumer Reports, often accessible through public libraries, as well as the Lemon-Aid used-car guidebooks, which Iny co-writes, to help narrow down the makes and models to look for.
Canadian Black Book (CBB) tracks used-car prices and hands out annual awards to cars that have the best retained value. “If you pay a little bit more for a vehicle – for example, Toyota has done very well over the years in our value awards – you’ll recoup more of that money back when you sell,” said Brian Murphy, vice-president of research and analytics at CBB. That’s worth bearing in mind if you don’t plan on keeping the vehicle very long or won’t drive it much.
Murphy noted that values for used vehicles fell by 3.3 per cent from March to April, according to CBB data. He expected prices to continue dropping through summer and early fall.
As for whether to look for a newer vehicle or one with fewer kilometres, Iny said to go for lower mileage when shopping in the $5,000 price range. “You’re buying condition,” he said. Vehicles today last longer than ever. The average vehicle is almost 15 years old and has almost 300,000 kilometres on it when it’s finally sent to the junk yard, Iny added.
“Like fruit at a supermarket, everybody wants a car to look perfect, but if the bumpers are banged up, if that’s all it is, a lot of other people will be put off, but you shouldn’t be,” Iny said.
A car that comes with stack of receipts for regular oil changes and other maintenance is ideal, because it shows the previous owner has looked after it. If you’re purchasing a used car through a dealership, ask to have the paperwork from any inspection they did.
Cars with a manual transmission and without air conditioning will be cheaper, but they won’t be a viable option for everyone.
Doing a deal
There are pros and cons to buying through a private seller or a dealership. At about $5,000, though, your money will go further with a private seller, since they’re usually not trying to turn a profit, Iny said. “Dealerships become more competitive around the $8,000 mark,” he added.
Just be sure the private seller is legitimate and not a “curbsider,” an unlicensed dealer selling multiple cars. The Ontario Motor Vehicle Industry Council, which regulates dealers, has tips on how to avoid curbsiders. They will often have multiple cars listed for sale at once, and/or may have only had a car registered in their name for a short period of time, or not at all. If a car is truly the seller’s own car, they’ll have stories about it.
Wherever you purchase from, do your homework on the car and trust your instincts in the beginning. Test-drive several cars before buying, if you can. Search for online buyers’ guides for a particular model and seek out web forums where owners discuss typical problems and bring that information along when you go to check out a car. Ask the seller about those issues. Some you’ll be able to check visually, others can be inspected – even by those with no mechanical expertise – using tips from a model-specific buying guide found online. What you’re mostly looking for here is honesty, a seller who is straightforward about any problems or defects. (With a $5,000 car, there will be some defects.) You’re trying to weed out the dodgy cars and sellers. If things seem as-advertised, that’s when you shouldn’t trust your instincts; take the next step and have the car properly checked out by a professional.
Have a prepurchase inspection done by a certified third-party mechanic. It could cost up to $150, but it can turn up potential deal-breakers and damage that a vehicle-history report missed, as well as routine mechanical issues that will need attention, all of which can be useful when it comes time to negotiate.
Yes, prices are usually negotiable. Don’t go in guns blazing with a lowball offer, but spending all this time doing research will put you in a good position get a fair deal.
Set aside at least $500 for immediate fixes, like new tires or an oil change, and – since you will be buying an older car – be sure to budget for regular maintenance and repairs.
Most car dealerships across the country are open, even if only by appointment. Be sure to follow physical-distancing and hygiene guidelines, but if you find yourself in need of a car on a tight budget, know that it can be done.
Shopping for a new car? Check out the Globe Drive Build and Price Tool to see the latest discounts, rebates and rates on new cars, trucks and SUVs. Click here to get your price.
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Matt Bubbers