Top 6 Best Used Cars Under $10,000 – 2012 Edition

As I’ve been looking at cars over the last few years I realized that some of the lists of best used cars under $10,000 sucked. A slideshow of pictures? Cars nobody wants? No thanks. That’s why I set out to create my own list of the six best used cars under $10,000. To be included in this list a car has to be 2002 model year or newer. Any car that is older than 2002 model year and still costs $10k is going to be expensive to maintain. The car must have an Edmunds True Market Value below $10,000. I also made sure that I could find the car with reasonable mileage at a price below $10,000. This helps to insure that you could actually find the car in a desirable condition for that price. I then assessed each car based on safety, fuel efficiency, features, aesthetics, reliability, and “fun-factor”. I obtained the safety, fuel efficiency, and reliability data from ConsumerReports and Edmunds. The aesthetics and fun-factor are both subjective assessments that I made myself. I then crunch the data through some Excel formulas and out comes my list of the Best Used Cars Under $10,000. This list is in no particular order, and should only serve as a starting point in your search for a good car under $10k. You’ll need to evaluate your own needs and determine what you require in a car.

2004 Infiniti G35 Sedan

Edmunds TMV: $9,533
MPG: 17 city / 24 hwy
CR: Very Good

2004 Infiniti G35 Sedan - Best Used Car Under 10,000

Infiniti has carved out its place among the luxury automakers as being more sporty than Lexus and more reliable than BMW or Mercedes. The G35 sedan is the result of Infiniti’s balance between sportiness and reliability. Edmunds says that the 2004 G35 sedan is “fast, affordable and stylish” and Consumer Reports gives it a reliability rating of “very good”. By comparison, the 2004 Audi A4 has a reliability rating of “poor”, and the BMW 3 Series and the Mercedes C-class are rated “good”. Edmunds gives it a used TMV of $9,533. So for under $10k, you can get yourself a reliable sporty-luxury sedan with a moonroof and heated leather seats. The example car I found was clean, with about 94k miles on it.

2007 Ford Fusion SEL

Edmunds TMV: $9,803
MPG: 20 city / 29 hwy
CR: Very Good

2007 Ford Fusion SEL Sedan - Best Used Cars Under 10k

The base Ford Fusion made my 2011 list and the Fusion is making it again in 2012. This time we’re going all out with the SEL version. The Ford Fusion SEL packs leather seats and a moonroof. Plus, the Ford Fusion has proven itself to be a reliable car, while still managing to have sportier handling than its competitors. If you need a reliable, sporty midsize sedan, the 2007 Ford Fusion SEL definitely deserves to be on your list. The example car I found pictured above was completely loaded and had 105k miles on it for $9,900.

2007 Mazda3 i Touring Sedan

Edmunds TMV: $9,559
MPG: 24 city / 32 hwy
CR: Very Good

2007 Mazda3 Sedan - Best Used Cars Under 10k

An economic compact car with good handling? Check. The Mazda3 sedan looks great compared to its competitors and has proven to be quite reliable. Although its fuel economy won’t win any awards, it will definitely suffice. Consumer Reports gives it a “very good” rating. Edmunds describes it well when it refers to the 2007 Mazda3 sedan as “entertaining yet sophisticated.” The 2007 Mazda I found was pretty loaded and came out to $9,750 with 98k miles.

2006 Mustang

Edmunds TMV: $9,874
MPG: 17 city / 26 hwy
CR: Very Good

2006 Mustang GT - List of Best Used Cars Under $10,000

The 2005+ Mustang really upped the ante from the previous generation, increasing MPG and bringing back awesome retro styling. A few years later this Mustang gets a nice MPG bump and HP bump, but with this one you’re getting most of the style and an affordable price. If you want a reliable car with some muscle for under $10k, then this is the one to go with. Consumer Reports gives it a “very good” rating and Edmunds remarks that the 2006 Mustang “presents compelling performance in all areas.” I was able to find a very clean 2006 Mustang with premium GT package for $10,000 with 90k miles.

2004 Toyota Highlander SUV

Edmunds TMV: $9,207
MPG: 19 city / 25 hwy
CR: Excellent

2004 Toyota Highland - Best Used Car Under $10k

Some families simply need the space and a sedan just won’t cut it. Or maybe you like the in-command driving position that an SUV provides. Whatever it is that you like about an SUV, the Toyota Highlander most likely offers it. The Toyota Highlander isn’t a full-sized SUV, yet it offers an available third-row backseat. That means you can have the extra seats when you need them without the fuel costs that a full-sized SUV brings with it. The 2004 Toyota Highland has Consumer Reports’ “Excellent” rating

2004 Ford F-150 SuperCrew

Edmunds TMV: $9,662
MPG: 14 city / 19 hwy
CR: No Data

2004 Ford F-150 SuperCrew Truck - Best Used Cars Below $10k

You know if you need a truck. If you “want” a truck, then I’d recommend not getting one until your finances are in line. The fuel economy of trucks is completely horrendous. However, if you need a truck, then the Ford F-150 SuperCrew should be at the top of your list. This truck can fit five people (or four burly men) and has the hauling capacity needed for most tasks. There’s a reason it’s been the best selling vehicle in America for 28 consecutive years. Edmunds says the F-150 is the “class leader when it comes to ride, handling and hauling capability.” The car I found had 105k miles and was listed for $9,700.

That concludes my 2012 version of the best used cars under $10,000. I’ve done my best assessing the information available online as well as my own personal experience to create a good list to start from when searching for the best used car under $10k. Used car prices are fairly high right now due to low new car sales over the last few years, so if you don’t need a new-to-you car right now, then it may make sense to wait. Now that new car sales are picking up in 2012 we can expect used car prices to fall over the next couple of years. Take a look at my previous post about predicting used car prices based on new car sales trends. If you decide to purchase a used car, you’ll likely sell your existing car. As you probably know, selling your car privately (on Craigslist or AutoTrader) results in a better deal for you and the buyer. You will receive more money than a dealer will give you, yet the buyer will pay less than a dealer will charge. If you decide to sell your car privately, I think you’ll find my post on selling a car on Craigslist useful. And if you want to ensure that you get top dollar for your vehicle, check out my step-by-step guide to formatting your Craigslist car ad. A well-formatted ad with detailed information and good pictures will save you a lot of time and ensure that you get top dollar for your car. If you’re interested in something a little less than $10k, I reccomend checking out my list of the best used cars under $8,000.

If you have any suggestions for my list that you’d like to see in the 2013 version and maybe cars that you recommend that I check out please post in the comment section. I read every comment on this site and would love to hear your feedback.

TrueCar Review – Truth About Car Industry

The car industry is one of the few industries in the U.S. where haggling at the consumer level on common. When in other countries it’s common to haggle for pricing. That’s just business. But in the U.S., we’re used to being given a price and deciding whether to buy or not. The car industry is unique because almost nobody pays MSRP for a car. MSRP is usually considered the “starting” point. Even though consumers have become more educated in the different pricing schemes used by automakers, consumers often still pay more than necessary. This is where TrueCar comes in. Now, this isn’t a complete TrueCar review since I haven’t used it to purchase a car yet, but I’ve used it for information purposes and if I ever purchase a new car I’ll definitely use it.

TrueCar is quickly becoming the authority in the car industry when it comes to transparent pricing on new cars. TrueCar aims to level the playing field when it comes to negotiating car prices by ensuring both sides of the transaction have access to all information. This is great for consumers, but TrueCar also serves Dealers. TrueCar partners with dealers to give them real-time, accurate information about the market and competitors, so they can adjust their business accordingly and increase marketshare.

Ford Focus 2011 TrueCarSo, you’re probably wondering what TrueCar can do for you. Well, there’s two major services that TrueCar provides. The first of these is its pricing information. Let’s say I’m looking to buy a 2011 Ford Focus. So I go to Truecar and find the Ford Focus page. Now, prepared to be giddy. When I first found this website I was ecstatic. So, if you click on the “Details” tab you can see a great pricing chart that shows you what the dealer really paid for that 2011 Ford Focus: Ford Focus TrueCar Dealer Cost

As you can see, the dealer cost is much less than the “invoice” price. You can often find this info elsewhere on the internet, but I think TrueCar makes it really easy to find and it’s all compiled for you. I think TrueCar’s benefit really starts to shine though when you use its compiled data.

Ford Focus 2011 Pricing Saving

TrueCar also provides the above pricing information based on its dealer sources. The above chart uses 53,347 transactions from the past 6 months. TrueCar uses all of this info to construct an average price, as well as standard deviations.

Ford Focus 2011 Local DealerRemember earlier when I mentioned that TrueCar partners with dealerships to collect information? It also partners with them to sell cars. It obtains “no haggle” prices by partnering with local dealerships. You configure the car as you want, and then you get a price guarantee. You can walk into the dealer and they’ll sell you the car for that price with no negotiations. No need to waste time. They’ve figured out the minimum they can sell the car for and be happy, and that’s the price you get. The dealer saves by not having to pay their salesman commissions for all that time he spent to sell you on a car. It’s really a win-win in this situation.

It would be really awesome to see something like this for used cars, but I think there would be issues because all used cars are definitely not the same. However, TrueCar says that they’re currently working on a beta for new cars. I’m definitely eager to check TrueCar Used Cars when it’s available.

What about you? Have you used TrueCar or another similar service to buy a car? What was your experience like? If you haven’t used it before, do you think you’ll consider it now?

Drive Debt-Free and Retire Rich

I recently stumbled upon a slideshow presentation on Dave Ramsey’s website title Drive Free, Retire Rich. I think the slideshow should be called Drive Debt-Free, Retire Rich, but that’s besides the point. If you’re anything like a normal American, you most definitely have a car. And if you’re anything like the average American, you probably have or have had, a car payment. According to the National Automobile Dealers Association, the average price of a new car sold in the United States is $28,400. According to Edmunds, a new car loses 15-25% of its value per year. The depreciation will largely depend on the make, model and condition of the car, but for this math, we’ll use 20% as the average. Whatever number you choose to use, everybody knows that cars lose a large amount of their value in the first few years of their life. With all of this depreciation, what usually happens? Most people will find that that they’re “underwater” on their loan. This seems to have a terrible stigma when it comes to homes. People worry about being “underwater”, which means they owe more on their home than it’s worth. This isn’t necessarily a bad thing if the value of your home is going to rise and you don’t intend to move and sell in the near future. However, for a car, this seems terrible. The car isn’t going up in value, and you most likely intend to sell it at some point in the next few years. So what’s the solution? I think this slideshow presents a good alternative.

For the math, let’s assume you decide to buy the average $28,400 car. Let’s also assume your current car is worth about $5,400 at trade in, so you need a loan for $23,000. If you were to purchase this  car today, and you had good credit, you could get a 4-year, 5% car loan. With this loan, your monthly payment would be $530/month!! To put that in perspective…I currently pay $600 per month in rent! RENT. But that’s for another time. So…back to this scenario. After 4 years, you’ve paid $23,000 in principal, $2,400 in interest, plus the $5,400 trade in. So in total, you would have paid $30,800 for this car (ignoring any time-value of money factors). Now, after 4 years, based on 20% annual depreciation, your car would be worth about $11k. Most people would then go a year without a car payment, and then decide they’re ready to upgrade again. You trade in the car for $9k and you start all over with a big car loan. This is how people get stuck paying a car loan for their entire life. This isn’t good, fiscally or emotionally. Cars drive better when they are carrying around all that debt in the trunk.

But there’s an alternative. What if you never took out another car loan again? How would that work. As someone who’s interested in pursuing such an approach, I’ll use my current numbers to paint this picture. This is my current car. It’s a 1999 Ford Escort.1999 Ford Escort Silver Don’t worry, I know exactly what you’re thinking. “Hey Will, you drive such a nice car! I wish I could save up enough money to buy such a fine automobile.” It’s true, I can’t deny it. I bet you can imagine how impressed everyone at work is when I roll up in this beauty…right… But back to the numbers. So, kbb.com tells me that my car is currently worth about $2k, which I believe is a fair assessment for my car since it runs great. So, the way the Drive Debt-Free plan works is this: Instead of buying a new car and paying a car loan, I’m going to put that money in a savings account each and every month. Instead of paying a loan, I’m going to be saving and paying cash for a car! Oh my! Imagine not having a car payment… So, the first step is to figure out a figure for how much you’d like a car to cost you each money. Paying $530/mo as I calculated above is just much too rich for my blood. I don’t need anything fancy, but I’d definitely like to upgrade from where I currently am. I personally think that $250 is a reasonable monthly figure for now. So, if I put aside $250/mo for a year, I’d have $3,000 saved up. In a year, I could likely get at least $1.8k for my car, assuming it’s still running fine. At the low end, depreciation really slows down because a working car is simply a working car. So, if I sell my car in a year, I’d be able to buy a car on Craigslist for $4,800. Now, my ideal car price is approximately $8k-$10k, so as long as my car is working great in a year, I’d bypass the upgrade and save for another year. So in two years, saving $250/mo, I’d have $7,800. That will allow me to upgrade from my 1999 Ford Escort, to a 2009 Ford Focus. (I can get a 2007 Focus today for that price, so I assume in 2 years I can get a 2009 for that price.) Once I’ve reached a car within my goal range, I can then cut back my savings so that it keeps up with depreciation. I could cut back the savings to approximately $200/mo. From then on, each year or two, I can upgrade. And the whole time, I’m paying $200 or so a month.

Now, for many of you, the number will be higher. If you want a car for the family, you may want a small SUV. The plan still works the same way. You save the money you’d be paying on a loan, and just continue to upgrade. You pay cash the whole way. Once you’ve reached a car in the price range you want to stay, you only need to save enough to keep up with depreciation. I think this is what I want to do for my upcoming car upgrade, so this is now going to be my tentative plan. I better go open up a new Ally bank account for my savings.