(This is the 3^rd post of the 8-part series An investing-friendly car buying guide.)

So you are going to buy a used car. Great! You have made a smart decision. The next step is to pick a budget – how much you want to pay for your car. This step is important, because your choice will decide how old a car you are going to get. From the depreciation graph, tweaking the budget by a couple of thousand dollars can mean getting a car that is few years newer or older.

In the world of used cars, the cheapest deal is not always the best deal. Getting a car for only $3000 may sound great now, but what you will likely get is a 10-year old clunker that may require costly maintenance over time. (My first car was a 13-year old Honda Accord with over 120,000 miles on it, for which I paid $3100. Over the next 4 years, it needed a few thousand dollars worth of repairs.) On the other hand, if you get a car that was kept well by its previous owner, and has low mileage, paying more now can buy you many nights of peaceful sleep.

Samarins suggests picking a budget between $8000 and $12,000, and I agree. From the depreciation graph, this means choosing a car that is 3-6 years old. With proper maintenance, such a car can go on for many more years relatively trouble-free. Let us settle on a budget of $10,000.

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