In 2007, Can You STILL Buy a Decent Car for a "Measely" $10,000 ??
Apr 19 '07
The Bottom Line Believe it or not, you really CAN buy either a new car or a used car for $10,000 --- even in 2007! Read on to see how...
Benjamin Franklin is the founding father we can thank for the pearl of wisdom that ..."in this world nothing is certain but death and taxes."
Having just paid Uncle Sam's annual April tax bill, I can attest to the painful truth of the latter, though I do think that "rising car prices" just might be another mathematical certainty that an analytical mind like Franklin's would have surely noted.
When the Epinions site first came online back in 1999, there were quite a few new cars that you could buy for under $10,000, and you had a wide range of excellent used cars that could proudly sit in your driveway for the same money. Driving comfortably and reliably on $10K was child's play.
That was then, this is now. In 2007, it's a very different car buying world. We're on the crux of witnessing the extinction of the $10,000 new car, and even over on the used car side of the dealer's lot, the pickings are getting to be slimmer than an anorexic runway model. Base models are tough to find anyway. Dealers want to sell fully loaded cars with upgraded trim packages and more bells and whistles than a kindergarten orchestra. (Not to mention bloated price tags.)
Don't despair though!
Budget car buyers can still (for now), land a new car deal for $10,000, and the knowledgable, careful buyer can still find good, solid, low-mileage used cars for that same $10K. It's just a matter of knowing the game and playing it well. Here's a few thoughts on where you might be able to find your own cheap wheels...
"Best Bets" If You Want NEW Cars...
There is really only one new car sold in America with a Manufacturer Suggested Retail Price under the $10K cap: a basic Chevy Aveo. It's dinky. It's slow. It's essentially a Daewoo. It doesn't have many perks beyond round tires and rubber windshield wipers. It's kind of ugly. But it is brand new and it does have a base MSRP of $9995.
MSRP isn't the whole story though: there are a few cars in the $10K to $12K range that occasionally pop up with locally advertised sales prices under that same $10K cap. They may be deals that reflect incentive cash, manufacturer promotions, or local dealer discounts, and they may vary widely in whether they have "local residency restrictions", but there always exists the possibility that you can land an under $10K deal The best bets in this category are small Korean econoboxes, especially the Kia Rio and the Hyundai Accent.
One question you might want to ask yourself is, "How firm is that $10K barrier?"
If the answer is, "Maybe a bit flexible if I can get more car for the money," then some interesting possibilities open up. The new Toyota Yaris and Nissan Versa hatchbacks can become viable options. They're still dinky, but many people put more faith in the Toyota and Nissan brands than they do in the Korean brands. If you're among those folks, you might want to at least look at these cars. Also, GM sometimes rolls out strong incentives on the Chevy Cobalt, which (at least here in Houston), gets advertised fairly often just barely over that $10K price point. At that price, it's a bigger car for the money and a more viable choice for a family with post-toddler age kids. It's also no secret that Ford has been having a tough time moving some of its fleet of oversize behemoths. If you'd consider a basic, unloaded, non-luxurious, standard cab pickup truck, the F-150 can represent an outstanding deal, and the basic models don't put you too far over that $10K price tag. Just an option...and getting a good deal on a car is all about keeping your options open.
"Best Bets" If You Want USED Cars...
If you have any kind of requirement more complex than "get from point A to point B", then you probably can't buy a good new car for $10,000 any longer. Cars that bigger, faster, more luxurious, or more powerful are all priced considerably higher than $10K --- usually two, three, or more times that lofty lowly goal.
Unfortunately too, most "low mileage late model" vehicles give you no real price advantage over a new car. Dealers soak you on trade-in values if you try to unload one of these cars, but they don't pass on much of that "depreciation" to the used car buyer. Even comparing online deals for 2005 or 2006 models, you see that you can almost always meet or beat the deal by doing a new car quote through one of the online buying mechanisms. (The exception is used cars that are high mileage, have expired warranties, and/or are in sub-prime condition.)
Of course CarMax sucks when it comes to fair prices (they like using the "sucker price", aka, Kelly Blue Book, and they don't like haggling from their inflated prices). The web site though is useful for getting a rough idea of how high a late model used car can be priced (and generally, everybody in the world can beat a CarMax price). Browing around cars for sale in the greater Houston area, I find no good deals on luxury cars, performance cars, SUVs, minivans, or pickups. The only halfway decent under-10K "deals" that I'm seeing at CarMax are:
* 2004 Chrysler PT Cruiser, 29K miles, $9998
* 2001 Honda Civic LX, 52K miles, $9998
I don't know about y'all, but neither of these deals excites me. They're mediocre at best, and most of the under-10K cars I'm seeing on CarMax are older and/or have significantly higher mileage on them.
Shopping the web sites of Ebay sellers sometimes turns up other interesting deals. I would probably never buy a car on Ebay (for a whole raft of reasons), but it is educational to see what's being traded online. Recently closed deals that looked interesting to me for under-10K purposes include:
* 1999 Mercedes S-class, 122K miles, $9800
* 2003 Mitsubishi Diamante, 46K miles, $9950
* 2001 GMC Sierra pickup, 73K miles, $9700
Of course these are just examples, and the cars available at any time are going to change, but it gives you some idea of the range of cars that you COULD possibly get, if you shop, if you're willing to make the trade-offs in terms of age, wear, etc.
Also remember, that while some high-end luxury or performance brands become affordable at older ages and higher miles, these cars also have notoriously high parts and labor costs and can end up costing you quite a lot in the long run. Unless you're a mechanic or are the kind of buyer who could comfortably afford a new car of that brand, but simply prefer to let somebody else take the depreciation hit, you're probably not the kind of buyer who should try to bear the risk of an older, but often very luxurious, vehicle. Just my opinion...
Recommended Strategies for Maximizing "Bang for the Buck"...
Buying a used car and keeping it forever is the sure way to minimize your automotive expenses. But it's a complicated, adversarial game, and you need to practice and learn in order to play the game well. Here's a few tips that might help you get the most car you can for your $10,000 budget...
Do Your Homework:
As with anything in life, getting a good deal boils down to knowing what you're buying and what that's worth. It takes some up-front study and legwork. Before buying any used car, check the following:
* Consumer Reports reliability ratings for the specific model you're considering, and for the manufacturer's product line as a whole. Don't get sidetracked by JD Powers ratings nor by Consumer Guide ratings --- these are NO substitute for rigorously collected long-term data from a sample population as large as Consumer Reports.
* NADA and Kelly Blue Book values (www.nada.com, www.kbb.com). Professional car buyers buy cars from you at a wholesale price that is close to the "trade in values" listed (actually, they have a "black book" that they use at auctions and that they consult before giving you a price for your old car --- you won't ever see this, since the dealers aren't allowed to tell customers about the black book, let alone the prices in it, but it does exist, the closest you can easily do is the 'trade-in' price on kbb.com --- this should be what you regard as the used car equivalent to an "invoice price"). Know the trade-in and the retail prices for cars of varying conditions, and you can go into a deal with your eyes wide open.
* Carfax (www.carfax.com) can be used to find out about a specific vehicle's history: whether it was ever totalled and rebuilt, whether it was involved in a lemon law claim, where it was registered, when and where it passed vehicle inspections, and similar such information. The Carfax information is often incomplete. It often has spurious red flags that do not indicate a specific problem. Don't rely on Carfax, but do use it. It is a useful tool for figuring out what things might bear further investigation.
Avoid "Certified Used Cars":
Manufacturers and car dealers like to promote their "certified" used cars. There's a reason for this: they charge more for them.
What you, the buyer, need to ponder is whether you really get enough extra value out of the "certification" to warrant the often substantially higher price tag that these cars carry. Lexus, for example, claims their certified cars are as close as you can come to a new Lexus. I can only presume they're talking about the wallopingly high price tags, which sure look to me like new car price tags...
On the plus side of "certified" cars, you do usually find newer, lower mileage cars with better service records, and you do often get a decent warranty. Personally, if I'm prepared to pay a "certified" price, I might as well pony up another $5 or $10 and get a brand-spanking new car. The question you should ask yourself is "why do the dealers promote certified cars"? The answer is profit, and that profit comes at your expense --- by buying non-certified cars, you can either make a better deal or get more car for the buck. That's why I recommend avoiding a car branded as "certified".
Be Wary of Ebay:
Ebay is a fun marketplace site, but I don't recommend it at all for buying cars. It's too easy to pay for something you don't expect, it's too hard to assure yourself of the quality you expect, the consumer safeguards are often weaker than you'd find locally, and there's often higher hidden costs of doing an Ebay car purchase than you'd face if you bought locally. Here's a few of the "gotchas"...
WYSINWYG: When you buy a car online, you need to be wary of what you're seeing. A snapshot of a car might look great, but also conveniently "overlook" scratches on the other side. There are vehicle inspection services that will go check out a car you buy on Ebay, but these add more costs to your transaction, possibly negating the "price advantages" of shopping online....or possibly not (especially since you should always get a professional inspection on any local private purchases you do as well). Ebay also has a policy of mediating disputes, but it's small solace if you get a seller kicked off Ebay...that doesn't get your money back.
There are often consumer protection laws that give you rights in disputing car purchases. Unfortunately, enforcing these laws becomes a nightmare when you deal with Ebay auctions that often as not will cross state and local jurisdictional lines. Your own state's attorney general might be very proactive about prosecuting shady car dealers, but his interest might suddenly wane if he realizes you're buying from an out-of-state party. And forget about getting help from federal authorities --- it won't happen. If you want the protection of state lemon laws, your best bet is to shop at local dealers --- especially established brick and mortar places, not fly-by-night online opportunists.
As for hidden costs, when you buy a car through Ebay, you may not be budgeting for all the costs involved in your purchase. If the seller isn't close enough to your home that you can go inspect the car in person before paying the money, you'd be a fool not to hire a professional inspector to check it out for you. Did you budget a couple hundred dollars for that?? And if it's not a local seller, you'll have to pay an auto transport company to pick up the car and truck it to you. Did you budget a few hundred more for that service?? And if you do buy out of state, and your state has vehicle inspection laws, you may have to pay for a state inspection and any repairs needed to pass....did you budget for that?? And don't forget that you'll still have to pay tax and registration fees, same as you would if you bought from a local dealer. These potential costs sure can add up, can't they??
I'm not saying to avoid Ebay, just use it with your eyes wide open. There are pitfalls and gotchas.
Look for Private Individuals, Not Dealers:
Car dealers are in business to make money, and buying a car from a pro will almost always cost you thousands of dollars more than buying from a private individual selling his own old wheels. That's reality. You can always save money on the same type, age, and condition of any car by buying from an ordinary Joe. Look in the classified ads of your local paper. Keep your eyes open for cars with for sales signs in them. Put the word out to friends and colleagues that if they're trading in a car, you can give them a better deal by buying it from them.
There's two gotchas to private sales though: a) know the condition of the car, and b) don't offer too much money.
If you know the person you're buying from, you can often get a great car for a great price by doing a private sale. If you don't know the person, you want to make sure you get a professional opinion. I have a mechanic I've used and trusted with my cars for many years. I wouldn't think of buying a car from a private individual without asking that individual to drop off the car for a few hours over at my mechanic's shop. I'll foot the $50 inspection fee for the peace of mind that comes from having the car put up on the rack and checked out, having compression tests done, checking emissions, etc. I can't know all this stuff by walking around, looking under the hood, or even test driving the car....but my mechanic has the tools and experience to test it out a bit more rigourously and dispassionately.
Another problem with private sellers is that they sometimes think they can clean up the car themselves and then ask the full Kelly Blue Book dealer price (aka, the "sucker price" --- the highest price a bank would finance). You want the price closer to the NADA trade-in price (aka, the "WHAT! That's all it's worth??!!" price). Negotiation should get you into the middle ground of the "private sale" price (which is also available on NADA, Kelley Blue Book, Edmunds, and most other car pricing web sites). And by the way, just remember, almost no cars are truly in "excellent" condition....that's really reserved for mint, or showroom condition vehicles...it's the "good condition" price that's most typical. Unless you're buying the car from your out of work brother or your grandma, you'd be an idiot to offer too much money for a car. Don't be an idiot....knowing the prices and getting help from pros will help make sure you get the most car for your buck.
Bottom Line...
It isn't easy to buy a $10,000 car in 2007. There's only a few new car models that you can touch for that kind of money, and they're all small econoboxes. If your needs are at all more sophisticated, you must buy used. Just do some homework up front, define your own needs, and don't get too passionate about it. You'll end up with a good set of wheels for not a whole lot of green.
See you on the road!
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