Dealerships are better because they at least have the limited warranty.
Buying from owner at that cheap is like a lottery. Sometimes you'll get a decent car. Other times it's going to end up costing more than what it's worth.
I've only ever bought cars under 5k. Here's what you should expect:
- They work good for about a year. If you get it to work for longer, consider yourself lucky.
- The more you know about cars, the better you will be when buying a car. This is any car, but 100x more helpful when buying used cheap cars
- ACTUALLY DO the preventative maintenance. Many people will skip out on oil changes and stuff because money. Learn how to do it yourself and do it when you should. This will help keep costs down, help you learn about the car, and help keep your car running better for longer.
- Get a Haynes manual for your car. It's got a breakdown of everything and walks you through a lot of the maintenance so you can do it yourself.
- BEFORE YOU BUY THE CAR, GET IT INSPECTED. If the person selling the car refuses to allow you to have it inspected, don't buy the car. The inspection is going to cost money. But it's better to spend $~100 (I think my last inspection was like $70) and find out the car's going to s**t on you in 6 months then spend $~4k expecting it to last a year when it only lasts half that.
- A good rule of thumb for inexperienced car buyers/users is to not buy a car more than 10 years old. But personally, I just set the cutoff at 1999. If it's made before then, don't buy it, unless you absolutely 100% trust the seller (or you're a mechanic).
- Toyota camrys last a longass time even when you treat them like s**t. So in this they are good, reliable cars to have. But you also have to keep in mind that the previous owner of a camry is more than likely to have treated it like s**t.
- Police auto auctions and rental car company sales should not be ignored. You can get some great deals at these. But you may not be able to get it inspected. I've personally never bought from these because I couldn't find them in my areas. But I plan to buy from them in the future and I've heard good things.
EDIT:
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My car history.
My first car was $700 to buy from the owner + $400 in repairs to make it drivable. It was an 88 Chevy Celebrity and it was honestly a death machine. It constantly overheated, it was s**t, tons of leaks, almost killed me from carbon monoxide poisoning once. Never again. BUT, good first car experience I suppose. It set the bar for what to expect.
My second car was a 1999 Plymouth Breeze. Bought it from a dealer for $4000 after all taxes and everything. Good deal. Except about 3 months in, the wiring started acting funny. Now, I was doing some stuff to the inside of the car so I'm not sure if it's my fault or if the place actually sold me a lemon. But within 6 months, the entire dashboard was nonfunctional. I moved overseas at that point and somehow managed to sell it for $3000 - I think they pitied me - and I heard it cost $1000 to fix the electrical issues. Outside the dashboard, that was an amazing car. Wish I still had it. Major problem though was that they don't make Plymouths anymore, so finding replacement parts down the line was probably going to be not worth it.
My third and current car is a 1997 Toyota Camry that was $4500. I overpaid for that but there were two factors at work here: 1, I needed the car like right then and 2, I was on Hawaii, so everything is overpriced there anyway. On the mainland, I'd expect this car to sell at most $3000.
I've had the car for a little over a year now. There are some MINOR issues, but nothing too terrible. The alternator gave out at about the 6 month mark. It cost $~300 to replace. Overall, this car has lasted longer (in terms of reliable driveability) then any of my other cars and while I'm not totally pleased with it, it was a pretty good purchase and meets my needs.
I'm pretty sure this car has been in a flood though, and while the last guy did a decent job of repairing it (he bought it salvaged), it's still pretty ******** up and to be honest I'm really surprised it runs as well as it does. If I really care to, I could probably fix all the problems with it. But since I'm planning on moving out of Hawaii in about a year, just keeping it running for another year is my main goal here. I'll sell it to someone else or for scrap when I leave the island.
Also, I don't know much about cars... Couldn't even change my own oil until last year. The Haynes manual and some friends have REALLY helped me out. I'm a lot more knowledgeable now than before.
I've always bought cheap cars because I move a lot, and it's easier for me to buy/sell than to buy a good car and bring it with me places. In fact, I'd actually lose money if I did that. I also like actually owning my car and being debt free. The idea of a car payment just seems silly to me. I buy all my cars in cash.