Key Points:
The car market has evolved. It’s harder than ever to buy a car under $5K.
The market is not linear. A $2K car is an order of magnitude different than a $4K car.
Car’s don’t actually go to $0
Sub $5k is about survival. The priorities are different. Mechanicals > Cosmetics
Ah, the good ‘ole $5K car. Whether it’s all you want to pay or all you can afford, it’s one of the toughest price points for car shopping.
My first advice? Shop above the $5k price point and move into the $5-10K block, if possible. If not, proceed below.
PRE-COVID/POST-COVID $5K MARKET IS VERY DIFFERENT
Like all industries, the car market has evolved to a post-COVID, inflation-adjusted, inventory-short level. The market changes and demands we get ahead (or at the very least, keep up).
What you thought $5K could get you is probably not the case. In fact, the same kinds of cars that were available at $5K in 2015 are the same cars that are available under $5k today.
THE MARKET IS NOT LINEAR
The closer you get to $0, the more drastic the quality of car degrades. For example, at $3k, you can get working cars with AC/heat, decent mechanicals, but they’ll be old with high mileage.
At $1k, you’re looking at parts cars, salvage-titled cars, or a car with decent-enough mechanicals to get you through 1 year. Oh, and if it has AC, that’s a major plus but don’t expect it.
CARS ALWAYS RETAIN SOME LEVEL OF VALUE
Cars don’t actually go to $0. They’re always worth something, whether to a junkyard or someone needing parts. So you can imagine the level of variation that takes place between $0-3k.
I can make the case that the minimum budget for a working car is $3k. And if this car can get you 2-3 years of driving with minimal maintenance put in, you’re golden. Drive it for 2-3 years and sell it for $2k.
SURVIVAL MODE: MECHANICALS > COSMETICS
Ultimately, when shopping under $5K, this is about survival- minimal costs, diminishing returns, and “get the job done.”
At this point, I don’t really care for non-severe accident histories and non-perfect cosmetics.
I also will only fix items that affect the drive. Rear windows don’t work? Oh well, we have the front windows. Bluetooth not working? No problem- bring a BT speaker.
The game here is to put in a minimal amount of money so that you can escape with minimal loss.
The sub $5K market is the most challenging space to shop in, but can be rewarding if you learn up. This is the time to level up, learn the game, learn from others’ mistakes, and figure out how to escape with minimal loss.
