A $5,000 car could be a wise option

Put your vanity aside and consider recession-proof transportation: a $5,000 car.

MSN Money wrote about this in the spring, and the more I think about it, the better it gets.

Sure, you might have to get used to your friends’ blank stares or raised eyebrows. But isn’t saving money supposed to be in style these days?

The premise is taking advantage of the technological improvements in cars that historically tapped out at 100,000 miles, but now easily approach 200,000. Especially with regular oil changes and other basic maintenance.

As long as you don’t have a hefty commute, and the car is close to 100,000 miles, it should last at least five years. Think of the savings you would enjoy.

Most car payments are in the $300 range for a mid-sized sedan or small SUV. Instead of applying that $5,000 toward a down payment, and then have to deal with 36-60 monthly payments, put that money in a savings account. Over three years, that’s at least $10,800 before interest.

Among the other areas to save:
- Sales tax
- Insurance
- Registration

Of course this scenario is not for most people. You’d have to not only know a mechanic, but have a good relationship with yours, unless you are confident to maintain the car yourself. Be diligent on maintenance and keep organized records. Before you buy, research the owner and car history thoroughly.

If you think it’s difficult to find a car in this price range, like I did initially, consider all of the places you could find one. A church bulletin board. The local pizza place. A corner convenience store. And one of the most popular places for salvaging great deals: an estate sale.

For examples of actual cars, check out this list from Consumer Reports.

Consumer Reports’ top picks, $4,000-$6,000

2001 Acura CL
2002-03 Mitsubishi Lancer
2001 Acura Integra
2000 Nissan Frontier (2WD)
2000 Acura RL
2002 Nissan Xterra
2000 Acura TL
2003 Pontiac Vibe
2004 Buick Century
2003 Subaru Impreza wagon
2003 Buick Regal
2000 Toyota Avalon
2003-05 Hyundai Sonata
2000-01 Toyota Camry
2000, 2002 Infiniti G20
2000-02 Toyota Solara
2000 Infiniti I30
2000 Toyota Celica
2001-02 Lincoln Continental
2002 Toyota Corolla
2000-01 Mazda B-Series (2WD)
2003-05 Toyota Echo
2002 Mazda Protégé
2001-02 Toyota Prius
2000-02 Mercury Grand Marquis
2000-01 Toyota Sienna
2004 Mercury Sable
2001 Volkswagen Jetta TDI