Buying a Used Car for Under $2,500

How to Shop the Automotive Bargain Basement

There are times when buying a new car isn't an option. Bills, debt or your current income may severely limit your budget and prevent you from getting the car of your dreams. But it doesn't mean you can't find something for a few grand to serve your daily commuting needs.

If you come across a "Buy Here, Pay Here" used car lot, steer clear. The prices and interest rates are significantly higher than average.

If you come across a "Buy Here, Pay Here" used car lot, steer clear. The prices and interest rates are significantly higher than average.

We chose $2,500 as a reasonable budget that would get you a solid car, albeit an older one. You will encounter unique questions and problems in this price range, however. This article will help you navigate this territory, anticipate challenges that may come your way and ultimately help you find a used car that will fit your price and needs.

Temper Your Expectations

In this price range, you can't expect the car to be perfect. The vehicles you find will most likely be 10-15 years old. They'll have some mechanical issues, worn interiors and even some dents. In this part of the market, it's common to see vehicles with more than 150,000 miles on the odometer. But assuming the vehicle has been well maintained, the car could still have many miles left in it.

Locate the Vehicle

You'll find vehicles in this price range at independent used car lots, online classifieds and public auctions. Most new car dealerships' used car lots won't have cars in this price range. There are some hidden gems to be found at car auctions, but the process requires quick decision-making, and buyers are not usually allowed to test-drive the cars. An independent used car lot might be more convenient, but it also might not be as willing to negotiate the price. If you come across a "Buy Here, Pay Here" used car lot, steer clear. The prices and interest rates for the cars are significantly higher than average. That's why private sellers are your best bet.

Private-party vehicles can be found online on a number of websites. A few good sites to look at are Autotrader, Craigslist and the classified car ads on eBay Motors . Use the detailed search tools to filter your search by price and model year. For example, set the maximum price to about $3,500 and the years from 1999-2012. The higher price point reflects where your negotiation may start, but your goal, of course, is to pay less. Filter the list to display the most expensive cars first. These are likely to be the strongest candidates in terms of condition. If the list is too overwhelming, try entering a smaller range of model years to narrow the search.

Be prepared to wade through used car listings with bad photos, unhelpful descriptions and cars that look too new to cost $3,000. Trust your instincts and if the ad seems suspect, move on to the next one.

Buying cars from strangers generally goes smoothly, but we highly recommend taking a look at Craigslist's suggested safety precautions.

Check the Car's Condition

Condition is the most important factor to consider when you're shopping for an inexpensive car. You can learn about the car's condition through a vehicle history report and an inspection. Both of these check-ups will tap your already tight budget, but investing in them will greatly increase your chances of finding a vehicle in good condition.

Before going to look at any car that interests you, get its vehicle history report. The report will show the number of owners and help you spot trouble such as an odometer rollback or accidents. Vehicle history reports can range from $30-$60, depending on how many reports you need to run. We recommend buying the monthly option, which allows you to run as many reports as possible. There's often no point in going to look at a car if it's fraught with problems that a vehicle history report has uncovered.

A number of car listings omit the Vehicle Identification Number (VIN), which is used to generate the vehicle history report. Call or text the owner of the vehicle and ask for the VIN so you can run the report. If the seller refuses to disclose the VIN, consider that a red flag and move on to the next car.

When you find a promising candidate, bring a mechanic with you or take the car in for a pre-purchase inspection. The pre-purchase inspection should be available at most Pep Boys and independent car repair shops. An inspection may take some time, appointment planning and willingness on the seller's part, but it is worth it. Ask the mechanic for an estimate of how much it would cost to fix any problems that are found.

Keep in mind, however, that older cars with many miles won't be perfect. Instead, focus your questions on potential problems that would strand you by the side of the road in the near future.

Assuming that the car has no major issues, make a note of these possible repairs and try to set aside about $500 to take care of them. You can also use the money for common preventive maintenance items like a new set of brakes, tires or an oil change.

Beware of Red Flags

As you shop, you will occasionally run into some problem areas. Here are the big ones:

Suspiciously low mileage: If the mileage seems too low for the age of the car, it could mean that someone has rolled back the odometer. A vehicle history report should flag this problem. A good rule of thumb is to assume that a car has been driven about 15,000 miles per year. If an older car's mileage comes in lower than that, ask more questions about its use.

Salvage titles: If the vehicle history report or the car's description on the title documents says "salvage title," be prepared to probe the vehicle's roadworthiness. A salvage title means that an insurance company has declared the car a total loss and a body shop has since repaired it. This doesn't mean that you should automatically strike the car off your list. If it was driven for a number of miles after the salvage title was issued, you may still want to consider it. However, be aware that the salvage title lowers the car's resale value. Of course, if you intend to drive the car until the wheels fall off, resale value might not be an issue for you.

Environmental damage: Keep an eye out for signs of snow and water damage. A flood-damaged car may have electrical problems down the line. In addition to obvious signs of water damage, a vehicle history report will probably tell you if the car has been damaged in a flood. Some states will spell out "flood damage" on the title, while others will issue a general salvage title.

Similarly, a car that's been driven in a snowy area where road salt was used could have suffered rust damage. Take a look under the car for are any signs of that. A vehicle history report helps here, too. It can tell you whether the car has spent a significant part of its time in a snowy state.

Be Inquisitive

Don't be afraid to ask the seller plenty of questions. How long has he or she had the car? Has it been in an accident? Does it need any repairs? Why is it for sale? Does the owner have the title? Is the car currently registered? Coupled with an inspection and history check, the seller's answers will give you a better idea about the car's upkeep.


Just because you are getting a car on the cheap doesn't mean you can't negotiate. In this price range, assume that the seller has priced the vehicle a couple of hundred dollars above what he really wants for it. With that in mind, it doesn't hurt to look at cars that are $1,500 or so above your price range. You might be able to bring the price down if the seller is willing to negotiate. And if the car needs repairs, you can use this fact to negotiate a lower price.

Use the Edmunds used car appraiser to determine the current market value of the car. Then, use the appraiser as a way to depersonalize the negotiation. On the phone, ask the owner how he set the price. And you can probe a seller's willingness to negotiate on the phone by asking if he's flexible on price. Make an offer slightly less than what you want to pay to give yourself some wiggle room for a counteroffer. But don't commit to anything without having first looked at the car.

Winding up the Sale

When you close the deal on a used car, make sure the seller signs over the title to you when you hand over the money. Make sure the seller's name, the car's year, make, model and VIN match the information on the title. Take the title to your state's department of motor vehicles as soon as possible. The car isn't officially yours until you have filed the paperwork.

Now take a minute to congratulate yourself. Even if it's not the car you've always wanted, it will get you where you need to go. And you didn't blow your savings to get it.

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