Before I get to the tips in this post, let me start by explaining how this blog about cash cars was conceived. It all goes back to when I listened to the audiobook “Total Money Makeover” in 2009, by Dave Ramsey.

Since I listened to Dave’s book, I became a regular listener to his radio show and later his podcast. I learned a great deal about how to deal with money and all manner of life and business issues as callers shared their stories and Dave provided his biblically based wisdom. I realized, as I listened, Dave often tells callers in financial trouble to sell their indebted car and buy a “beater” for cash.

As I continued to listen to Dave’s show, I noticed he didn’t discuss the details of how to buy a good cash “beater” with his callers. This gave me an idea of how I might find a niche for helping others who are struggling financially, but I still didn’t quite know how to make it work.

The answer became clearer when I heard two of my nephews’ had recently bought inexpensive cars for cash and neither one’s car was running. I thought, I wish they had contacted me. I could have helped them buy better cars with whatever amount of money they had. The more I thought about this, the more determined I was to help others buy better cash cars.

Driving home I realized I could do a blog on how to buy a better cash car. That was back in December of 2012 and though it took me until August of 2013 to publish my first post. I did get started. I knew how I wanted to help people buy a better cash car by sharing my experiences in a blog.

I think the tips I lay out in this post are especially relevant for inexpensive cars being bought for $5,000 or less. I believe the lower the target price a car buyer has, the more homework needs to be done to ensure finding a quality car. Those in debt with no savings need to get their cash car buy right the first time, as they have little financial margin in their lives.

In this post, I list 5 tips I have used for finding a better cash car. I will warn you none of these tips are earth shattering. I think many readers will consider them common sense, but when used together they will result in finding a better cash car. These tips can help a first time car buyer, a new divorcee starting over with limited resources, or a family battling a debt crisis.

5 tips for finding a better car:

1. Buy your next car from a private seller. The lower the cost of the car you are buying the more important it is to buy from a private seller versus a used car lot. This has nothing to do with whether there are or aren’t good used cars on a used car lot. There are. It has everything to do with reducing the buyer’s risk and helping the buyer get a better price. There is one downside I need to cover when buying from a private seller. Buying from a private seller leaves the buyer with less recourse if there is a problem with the car after the sell. I think this risk is more than outweighed by the benefits. Below are some of the reasons I like to buy from a private seller.

I want to meet the current owner face to face and get a feel for the person he or she is. Does he or she exhibit  pride of ownership?  Why is the car being sold? These are things to look for and ask.

I want to look at his or her house, yard, clothing, and anything else to help me determine what type of person is trying to selling me this car. Is the yard overgrown? Does the house need painting or have repairs undone or incomplete? If so, there is a good chance the car needs maintenance or repair as well.

I want to know if he or she kept a folder of maintenance and repair records and, if so, I will want to see them. Did the car have regular maintenance? Has there been a history of costly repairs? I was looking to buy a Range Rover many years ago and took it to my mechanic for an inspection. He couldn’t find anything wrong with the car as it was in excellent condition, but he did find an invoice for an $8,000 brake job in the glove box. I didn’t buy that car and I have no doubt it saved me a bundle in repair expenses.

Lastly, you have a better chance of getting a good deal. This isn’t because you are trying to rip someone off, but because private sellers have many reasons for selling a car. A dealer has only one reason, which is to make money. There is absolutely nothing wrong with making money, but you don’t want them making it on you. Dealerships negotiate everyday to get the highest price they can for the cars they are selling. They are pros and cars are their business. When dealing with a private seller you are on more even terms. Finally, private sellers are much more open to accepting an offer when they see cash in hand than the local used car dealer.

2. Determine the make and model of the car you need. Notice I didn’t say the car wanted. If you have your financial house in order, emergency fund in place, retirement being funded, kid’s college education being funded then “want” is a little more acceptable. If, however, you are living paycheck to paycheck or worse beyond your paycheck you will want to focus on “need.” You owe it to your family and yourself.

When determining the type of car needed, it is easy to look at makes like Honda or Toyota to find a reliable used car. You should note a price premium will be paid for these makes. I recommend looking at other highly reliable used cars that don’t get the same coverage Honda and Toyota do. I like to use Consumer Reports to help locate these cars. Consumer Reports has a list of dependable used cars from the last 10 years at various price points listed in an article titled Used cars for every budget, which is updated regularly. Maybe even more important, this article has a list of car to avoid, which can save you a great deal of time in eliminating cars which have shown below average reliability. A subscription is required for access, but this is money well spent. A subscription is currently $30/year or $6.95/month and will pay for itself many times over by helping avoid a costly error in car choice.

Consumer Reports can also help with reliability ratings, safety ratings, and provides information on the kinds of problems certain makes and models may typically have. This will prepare you with the information on what kinds of problems are unique to a specific make and model.

3. Determine the value in your market for the makes and models chosen. There are many excellent sites to help with this determination. I would typically use several such sites to get a range of prices to get myself comfortable with understanding the value of the cars in which I am interested. Some of these sites are Edmunds, Kelley Blue Book, and AutoTrader. It is important to note regardless of the site used you should be looking at prices from private sellers as this is my recommended method of procurement.

Both Edmonds and Kelley Blue Book allow you to configure a car with specific models, options, and car condition. Pricing can then be look at based on private sale. With AutoTrader you can look at the cars you are interested in and see how much they are priced for in your area. While Edmonds and Kelley both allow for zip code as search criteria, nothing beats checking the local market for actual cars being sold, which AutoTrader allows you to do.

4. Develop a rough estimate for the total cost of ownership (TCO) for each car considered. This isn’t as hard as it sounds and TCO considerations is something the business community has been doing for their purchases for a number of years. It is an important step many used car buyers overlook.

Take the time to figure the cost of a few major items like monthly fuel costs. This is a big one with the current cost of fuel. Also include other items like monthly insurance cost, annual maintenance costs (oil changes, tire rotation, etc.), and estimate repairs.

I learned the lesson of TCO the hard way. I bought a used1990 Lexus, LS 400, and it was a great car. I even got it at a good price. What I didn’t do was consider the cost to maintain and repair it. First, it required premium unleaded which added cost to every mile driven. Next, it required larger tires than other cars I had owned which made the tires much more expensive. Lastly, I learned luxury cars having more bells and whistles lead to more potential things going wrong. When these things do go wrong, they are also more costly.

For example, my1990 Lexus, with the self leveling air suspension system each single shock absorber cost $1,000. They could not be sourced from a wrecking yard or other vendor, they had to be bought directly from the dealer. Replacing a few of those got my attention.  I think this example should give you pause to think about costs beyond just acquisition.

Edmunds site is a great place to go for this type of information.

5. Start a through search for a good used car, have patience. I typically like to start with AutoTrader and have used it for the last several cars I bought. This is where the fun begins for me. I love the hunt for a car. I will outline a few of the options I use in AutoTrader.

I typically start my search by choosing two or three make and model combinations with limits set for price both low and high. I will then limit the search to cars with photos, pricing, and limited to private sellers. Lastly, I search cars that specify one owner, if any can be found. This will bring up a list of cars I can further explore to see if I can find any that catch my interest. I can then make calls or send e-mails to get additional details and determine which if there are any on the list I want to see.

Take your time, patience is required during the search phase. You are buying a car that will hopefully last you for years, so it is okay if it takes a few weeks or a month to find. It will be worth the time.

These tips above helped me find many good cars. Use these tips and you too can locate a better cash car that fits your needs.

Next week I will share what to do once you find a car you would like to explore beyond the web.

Please let me know if you have any specific questions I can help with for an immediate cash car purchase.

Question: What is your top tip for finding a good used car?