5 Tips for Buying a Car on a Budget

Purchasing a reliable car on a tight budget has never been easier thanks to healthy competition between manufacturers and the flexibility of resale.

In most advanced nations the private car resale market is mature and diverse with a wide choice of vehicles available on a tight budget. Amongst the big bonuses of buying a cheaper vehicle are that they are logically cheaper to insure, cheaper to run and cheaper to service.

Purchasing a good quality car for the equivalent of US $10,000 or under is achievable in most markets. For our European readers that’s approximately €8,650, for Brits we’re talking roughly £7,575 and for Australians that’s around AUS $14,000. It’s a decent starter budget whatever market you’re in, providing plenty of choice.

Figure out what you really need

Before you start browsing online or visiting dealerships first figure out what you really need from your new set of wheels.

Will a two-seater, three-door vehicle need replacing within two years if you’re planning to start a family? Is fuel-consumption on a long commute to work going to be the main motoring expense after your initial purchase?

You might want to fit the vehicle into a confined parking space or you might need something bigger and more powerful to tow a caravan or trailer. Perhaps you’ll be taking your kids to and from soccer games and therefore need plenty of seating and room for muddy kitbags. Another factor might be ease of getting in and out of the car for elderly relatives.

Write down exactly what you need from your vehicle, set the maximum budget and work from there. Show that checklist to your local second-hand car dealer and see what they have to offer. View the models they recommend to fit your requirements and then figure out the best way to get that exact vehicle, either through the initial dealer, other dealers or reviewing online listings.

Maybe you are just looking for something small and fairly sporty for romantic weekend road trips with your new partner. A Mazda MX5 Cabriolet might be your choice and there are plenty on the market for buyers with smaller budgets.

Look beyond trendy brands

Most of us would love a BMW or a top-of-the-range Audi. Like with most things though you pay more for the biggest name brands and status-symbol models. That’s not to say you should immediately rule out buying a nice second-hand Audi, BMW or VW, as they make reliable vehicles and hold resale value well.

However, looking towards Asian manufacturers such as Kia, Toyota, Hyundai, Subaru and Honda can get you more bang for your buck on same spec models from trendier brands. These manufacturers all produce highly reliable vehicles and attitudes towards them are improving globally year-on-year.

Think beyond the initial purchase price

The ever-brilliant moneysavingexpert.com provides plenty of sound advice on what to think through when you’re buying a car, whether it’s new or second hand.

There is plenty to figure out when you are setting your maximum budget and then figuring out how much you are willing to spend running the car. Weigh up options such as petrol vs diesel, hybrid vs EV or manual vs automatic. Initial purchase prices on automatic vehicles can be higher, yet there can be savings on fuel consumption further down the line.

Cars with smaller engines are usually less costly to acquire and cheaper to run on shorter journeys. However, cars with larger engines are more suited to longer journeys and traveling at high speeds on highways, again affecting fuel economy.

Lower budget hybrid vehicles and electric cars can be found on the second-hand market. Initial costs can seem higher – will I ever make that money back? – so monthly or yearly running calculations have to be made. Tax breaks, cheaper tolls and lower running costs can all come into play and these newer, greener vehicles often hold their value in the long term.

Don’t part exchange or trade

If you are selling a vehicle in order to purchase your new low-budget car every penny counts. Part-exchanging an older vehicle is still fairly common practice with many second-hand car dealerships but rarely represents value for money.

There are pros and cons to part-exchange trade deals. On the plus side, these are usually convenient, time-saving arrangements, though ultimately the dealership taking your old car off your hands is likely to be looking to take at least 20% off the value of the vehicle.

Whilst private sale involves more work on your side it should provide you with a far better price for the old car and therefore give you more to spend on your new purchase. Selling a vehicle privately just before you buy a newer model also gets you into the buyer-seller mind frame and helps with making wiser purchases as you see the game from both sides.

Don’t go alone

This tip applies to buying any second-hand vehicle but is especially important when buying a car at the cheaper end of the scale. Whether buying privately or through a dealer always take a trusted mechanic along with you to check the vehicle over before cash changes hands.

Any payment you make to a mechanic could save you serious money further down the line. If you cannot find – or afford to pay – a friendly mechanic, then ask a mechanically minded friend or frugal relative to accompany you. They should help carry out specific checks on the vehicle and documentation, preventing you from making an unwise or impulsive purchase.

If you are caught in a situation without a mechanic, or more experienced friend/relative alongside you, make sure you know what you are looking for when inspecting a vehicle yourself. This useful wikihow.com article provides in-depth pointers on what to check, in terms of vehicle form, tyres, lights, paint job, chassis, trunk, exhaust system, undercarriage and crucially what’s under the hood.

You will also want to test drive the vehicle and test acceleration, braking, steering and dashboard functionality, such as air conditioning.