Finding a good used car that's cheap

Money doesn't buy you happiness, especially if you spend it on a car that constantly breaks down. Here's a starting point for the buyer in a market for a used car that does the job without costing a fortune.

Let's start with setting expectations low – low enough to match the budget. Champagne tastes won't be satisfied on a beer-bottle budget, so if you have $5000 in cash, buy a car within that limit. Don't, however, exclude a good car on the basis that it costs $6000 if you can haggle the seller down to your budget ceiling.

Also, don't be put off by 'automotive influencers' (often car enthusiasts who can be a little high-handed about cheap cars). If it's a Holden Cruze or a Nissan Pulsar, and it's affordable, don't dismiss it just because it lacks cachet. Provided the car meets a reasonable standard of reliability and ownership costs, it should be on your shopping list.

Look at big names and volume sellers. If the car you're considering (Toyota Corolla, Mazda3 or Hyundai i30) was popular when new, that's probably because professional fleet buyers at the time recognised that the car in question would be reliable, economical and still retain some value at trade-in time.

Now that you're planning to be the car's second buyer, retained value is a lower order of priority in making your purchase decision.

If you're buying a used car that was formerly owned by a fleet, do some research and establish whether the fleet pays particular attention to servicing and the car is low kilometres and perhaps driven by just one person. By law, the dealer has to reveal the previous owner of the vehicle.

If that previous owner was a company, consider ringing the company, ask to speak to the fleet manager and question him or her as to whether the car has been carefully maintained and driven.

Don't be drawn in by a car with more cachet just because it's a four-cylinder and should be economical to run. There's no use buying a car that's too expensive to purchase and too expensive to keep on the road.

At a glance
• The best value is a car that's unexceptional but reliable
• Check the car's service history and contact previous owner for more info
• Buy a car within your means and budget
• No orphans, no drastically depreciating Eurotrash from two decades ago
• Limit the search to well-known brands and popular models up to 10 years old
• Aim to buy a car still covered by a factory warranty
• If you want an affordable car, don't be distracted by other factors
• Do your research online first
• Listen to advice from those who know

Having to fill up on premium unleaded will cost you more. Parts and servicing will be expensive also and the purchase price may be higher than for other cars that might be newer and more reliable, but not 'prestige'.

If you're an 18-year old the insurance premium for even modest European cars may be exorbitant. Anything exotic will be outside the scope of the 18-year old's licence restrictions.

So if you can only afford $3000, don't buy the BMW 3 Series or Mercedes C-Class from two decades ago. In fact – frankly – steer clear of anything from Europe that's up around that age.

Budget limitations don't apply to young drivers alone. You may be a pensioner, or a single mum, but even captains of industry are often held back by cost. Always leave something in reserve for servicing also, because you'll never know when some unexpected expense should crop up – and that's just as likely in the first month after purchasing the used car.

Consider a servicing agreement if available; it is likely to be easier on a tight budget.

When you're searching for a used car on carsales.com.au, there is a price filter on the home page that allows you to select cars based on the minimum or, more importantly, the maximum price you want to pay. Look for a vehicle that will run on standard unleaded fuel, a vehicle that is easy to maintain and won't require a treasure hunt for parts in years to come.

Locally-manufactured cars are a fairly safe bet, although filling the tank can be expensive. Japanese and Korean brands from recent years are usually the best option for budget buyers.