“Can you help me buy a used car for less than $5k?”
We used to hear this question from car buyers all the time. They knew that as dealers, we purchased cars from wholesale auctions for customers as a service (called auto brokerage) and that we used to sell refurbished vehicles that meet our high standards.
Unfortunately, finding a car for $5,000 these days is harder than ever before. We put together the following advice for car buyers on how to buy a reliable used car at this price point.
Why is it so hard to buy a car right now?
First, if you have tried to purchase a car lately, you know that used car inventory is low, and finding what you are looking for is harder than ever. Also, when you find a vehicle that fits your needs, the price seems much higher than expected.
Used car dealers, who purchase the cars on the wholesale market, are having the same difficulty. It is hard for dealers to find good cars right now, and that lack of supply causes wholesale car prices to be higher. More dealers are competing to purchase fewer vehicles, and all of this drives retail prices higher.
Purchasing a car on Craigslist from a private seller is also difficult right now for the same reasons. Prices are high, and there are not many cars to purchase. We think this is caused by several reasons, including a lack of new cars that are causing people to hold onto their vehicles longer, choosing not to upgrade their cars as frequently, or even switching from gasoline-powered to electric vehicles. Local market conditions have a significant effect on Craiglist and its hyper-local marketplace, and Portland used car prices have always trended a bit higher than the national average, even before the latest market changes.
Check out our *free and downloadable* used car inspection checklist:
Used Car Inspection Checklist – downloadable
Free downloadable tool for inspecting a used car prior to purchase.
What does $5k get you in today’s market (late 2022 / early 2023)
In the Portland metro area, right now, a typical $5,000 car:
- has around 200,000 miles or more on the odometer
- is at least 15 years old
- has body damage (either from an accident or from wear and tear on the vehicle)
- most likely has an expensive repair that will need to be fixed in the next few months
“Can I hire you to buy a $5k car for me??“
We do not currently buy used vehicles for customers, but we do offer hourly auto brokerage services. Esprit can help you to research a purchase, identify a strategy for how to get the most bang for your buck, inspect the car, and help with negotiating the purchase price. Please see_____ to learn more about our auto brokerage services. Also, ____ describes the process of hiring an auto broker to help you purchase a car.
What can you do if you’re not quite ready to hire a broker?
Our advice is that if you want to buy a used car for $5,000, then this is a time to take to Craigslist or Facebook Marketplace and turn it into your personal project. Finding good, reliable $5,000 cars that won’t quickly become a money pit is much harder than finding a good 3-year-old car.
Here are our tips
Most cars at the $5,000 price point will be older (obviously), have more than the average number of miles, and might also be a make, model, or body style that is not popular in your area. So if your initial search for a great $5,000 car doesn’t pan out, you will need to expand your search and reevaluate your criteria. Don’t rule out good cars just because they have higher miles or are a few years older. With the proper maintenance, most modern cars can easily go 200k or even 300k miles.
Focus on how well it runs, not how good it looks. These cars might have cosmetic issues that would cost a significant amount to fix but do not impact how the car runs and drives. Be willing to look past minor cosmetic defects to get a reliable car.
Sometimes cars for sale for $5,000 (from a private party seller) are cars that the seller needs to sell quickly. The seller will get a lot of responses from potential buyers as soon as the car is posted on Craigslist, Facebook Marketplace, or OfferUp. Because the seller will receive a lot of potential buyers contacting them, you or other serious buyers need to be willing to drop everything and go look at the car (and be ready to leave a deposit) as soon as possible. Think about going on your lunch break, not at the end of the day. Good cars at a great price can sell within an hour.
Most cars being sold for under $5,000 by private sellers have a significant mechanical issue the current owner does not want to fix and that they don’t want to tell you about. It’s rare for people to sell perfectly good cars for no good reason. Your job is to figure out why they are selling the car and make sure you’re not purchasing a $5,000 car that needs a $5,000 transmission or engine.
Sometimes cars that are offered for less than Kelly Blue Book’s market value or at a lower price point are located outside of a metro area. While it might be a great car, the seller is not going to get as many potential customers that are willing to drive out to a location far from a metro area. With less competition, the price of the car will be softer. You might get a good deal if you’re willing to take a chance and drive further away.
Be willing to look at a lot of cars. You will probably miss out on a good car or two at first, but once you know the market, you will know when a car pops up that is a good deal. Finding a great deal takes time. But if you’re running out of time and patience, call us, and we can help.