Cheap old cars turn up all over the place. Low interest rates mean cheap finance deals on new or nearly new cars, and right now the general motoring public really can't be bothered with anything more than about five years old. So there is a massive oversupply of solid, usable older cars, if you know where to look.
Dealers
For most people, the most obvious place to try is a used car dealer. A few years ago there were lots of small-time dealers who would sell you an old banger for a few hundred notes, but they have become thinner on the ground. Blame the combined effect of Trading Standards and unrealistic customer expectations fed by TV programmes like Watchdog. These days, if a dealer sells a £500 Vauxhall Astra and it blows up after four months, the buyer isn't just going to shrug his shoulders and pay his local garage a hundred quid to bung in an ex-scrapyard engine. More likely he'll demand his money back, get Trading Standards, the Citizens Advice Bureau and a host of 'consumer champions' involved, and the poor old dealer will find himself in a world of trouble. So most dealers now stick to selling newer cars, where they can farm the warranty costs out to an insurance company and not worry about any comeback.
However, there are a few dealers still selling cheap old cars. Some of them try to get round the consumer protection laws by advertising the cars as 'trade sales', meaning the cars are only supposed to be bought by other traders to do up and sell on. This means no warranty, and if you turn up waving a bundle of used tenners, the dealer isn't going to waste time interrogating you to find out whether you are really a trader. It is very doubtful whether this line would stand up in court, so if you purchase a 'trade sale' car as a private punter, and it turns out to be two half cars held together with pop rivets and underseal, you can still invoke the Sale of Goods Act - if the dealer hasn't disappeared by the time you discover you've been ripped off.
In theory, if you buy from a dealer, the car should be 'of merchantable quality' and 'fit for the intended purpose' as well as being 'as described'. In a private sale, a car only has to be 'as described'. However, the courts are free to interpret merchantable quality and fitness for purpose as they see fit, and will not apply the same standards to a twelve year old car as they would to a three year old one. So really, the only extra legal protection you are getting in buying from a dealer, is that if the car does turn out to be a rolling death trap, you can get your money back. But if the headlamp switch packs up after a week, or the engine drips oil onto your drive when it gets hot, or the spare tyre turns out to be flat, that's the downside of buying a banger. The legislation does not oblige the dealer to sell you a car for £500 that is as perfect as the day it left the factory, whatever impression you may have got from watching 'Britain's Worst Car Dealers' on TV, and if you take the car back and complain, he is well within his rights to tell you to eff off.
So, buying from a dealer is usually more expensive than buying elsewhere, and you don't get a lot for the extra cash. Not surprising really - a dealer has to make enough profit to cover his overheads, so he must be buying the cars a lot more cheaply than he is selling them. So why not cut out the middle-man, and buy direct from the same places he does? There are four possible sources of cheap cars for the motor trade: buying direct from other dealers, auctions, salvage yards and private sales. You won't normally have access to the first source, unless you have a mate who works for a large main dealer, in which case you just might be able to pick up a car that has come in as a part-exchange. These cars are usually either sold on to the trade, or auctioned. Big franchised dealers really don't want to have Roger Cook chasing them down the street because of a £500 Escort, so they are very wary of letting their part-exes go to private buyers, but you might get lucky. Don't count on it though.
Auctions
There is a lot of mystique surrounding these places, and you may have heard that they are great places to pick up cheap cars. Forget it. Cheap cars at auction are only there for one of two reasons. Either they are main dealer part-exes (which are usually but not always OK), or they are being offered (either by small traders or private vendors) because they have faults which make them impossible to sell by normal means. It's not usually easy to tell which, although in general if the car is filthy and the ashtray overflowing, then it's probably being sold by a main dealer. Only small-time sellers bother to clean and polish cars going to auction. You can't test drive the cars before you bid, so you won't find out that your new car has a burnt out clutch and no reverse gear until after you have paid for it. Your legal protection is no more than if you were buying privately, and you will be bidding against hundreds of dodgy geezers who scratch a living from buying cars at auction, then selling them on as 'private sales' (see below). Auctions are great places to pick up three year old direct ex-fleet Mondeos and Vectras for a decent price, and in the knowledge that they haven't been 'clocked', but for older cars you are taking a big risk for a very small cash saving. Car auctions are a lot of fun to attend though - spot all the local villains in one place, laugh as uninformed private punters bid over the odds for cars that you wouldn't take away for free, have a cup of tea and a hot dog, but don't take more than a tenner with you.
Salvage yards
Possibly even more dangerous than buying at auction is to buy a lightly damaged car from a salvage dealer. The theory is sound enough. If an older car is involved in an accident, the insurers will declare it beyond economic repair even if the damage is very minor - a dented door or scraped front wing, for example. Salvage dealers buy these cars at closed auctions, and if they think they are too good to break, they offer them for sale. So you buy a car for maybe half its normal value, replace a couple of bolt on panels and away you go. Sounds good?
Actually, no. There are a couple of major problems with this theory. First and most important, car bodyshells are designed to crumple progressively in a collision, so as to protect the occupants. This means that even a fairly minor knock can cause the bodyshell to distort in areas a long way from the point of impact. Secondly, even if the damage is confined to outer panels, you probably won't find replacements in the same colour, so you will have to add the cost of having them resprayed. A motor trader will have the facilities to do this very cheaply for himself, but you as a private punter won't. Thirdly, many salvage cars have been sitting around for so long that the MoT has expired, and you can expect rusted brakes and a host of electrical problems when you try to put them back on the road. And finally, since the car is recorded as an insurance total loss, if someone runs into you the insurers will reduce the payout accordingly.
Salvage dealers also offer 'stolen recovered' vehicles. These will usually have smashed door and ignition locks, maybe a broken window and the stereo missing. Be very wary of them. Replacing a combined ignition / steering lock is a pig of a job (it's usually easier to change the entire steering column), and if the car has been stolen by joyriders, it will have been thrashed to within an inch of its life (and possibly beyond). Also the methods normally used to break the steering lock are fairly brutal, and you will usually find that the steering column shroud, switchgear and maybe the lower edge of the dashboard have been smashed to pieces. The steering column mountings may be bent as well. I wouldn't touch one with a bargepole.
With so many sound, straight old cars out there, you need to have a very good reason for buying a bent one, however cheap it is. You should only look at a salvage car if you are absolutely certain that the damage is confined to easily replaced outer panels, and if the car was in outstanding pre-accident condition. I've had a couple of salvage cars and got good service out of them, but you are likely to end up looking at an awful lot of bad cars before you find one worth the hassle.
Private sales
And so we move on to the biggest and best source of cheap old cars - the private sale. You see cars for sale advertised everywhere, from corner shop windows to local newspapers. Some people stick a 'For Sale' sign in the car itself, and leave it parked by a main road. You can buy cars in internet auctions (I wouldn't recommend this, even though I've done it myself), and then of course there is the good old Auto Trader, which normally has a few pages of sub £1000 'Bargain Buys' each week. Depending on where you live, there may be a local free-ads paper - I have bought at least fifteen cars for myself and on behalf of others out of the Anglia Free Ads paper, which covers most of East Anglia.
As mentioned above, if you are buying from a private seller, the only bit of the Sale of Goods Act which applies is that the car has to be 'as described'. So if it is described as 'genuine 40,000 miles' and you subsequently meet up with a previous owner and find that it had done 98,000 when he sold it two years previously, you have a case against the seller. Likewise if it is sold as 'recently rebuilt engine' and you find that the only reason it runs so quietly is that the sump is full of 90 weight gear oil to disguise the massive wear in every moving part. However, this only works where the vendor has clearly lied to you, and you can prove it. Some deeply sad individuals have attempted to take vendors to court on the basis of the car being described as 'vgc' (very good condition) in the advert, and subsequently breaking down. A friend of mine actually ended up in court after selling an old Citroen for £250. He had described it as 'good condition for year', which to any normal human being it was, especially considering the price. Unfortunately for him, the buyer was a very abnormal human being, and produced in court a long list of alleged faults including 'sidelight bulb failed after short time' and 'parcel shelf damaged'. The magistrate had the good sense to throw the case out.
Something that always gets the TV investigative reporters terribly excited is the small time car trader posing as a private seller (and thereby attempting to evade his obligations under the Sale of Goods Act, as well as income tax, VAT, and a huge mountain of official paperwork). The politically correct line here is to advise buyers to make sure that they never buy a car from such a person. However, I don't subscribe to political correctness, so I'm not going to follow the party line on this one. You are looking to buy a car privately, right? So you have already made the decision to do without the (very limited) protection that you would get if you bought a car from a dealer. So do you really care whether the guy you are buying from is selling one car every three years, or three a week? All that matters to you as a buyer is that the car is in good condition, fairly priced, has all the right paperwork, and the chassis number is the same as the one in the logbook. As for whether the seller is making a living from dealing in cheap cars from his home, that's a matter for the tax officials, local planning officers, and his neighbours. It isn't your problem.
If you are buying privately, you have all the time in the world to give the car a really thorough inspection and test drive. Make good use of it - see my Banger Buyers Guide for more. Remember, no-one is forcing you to buy this or any other car, and if you spend all your money on something that turns out to be scrap, there is only one person to blame - yourself. Not the vendor who didn't tell you about all the faults, not the Government for failing to regulate second hand car sales effectively, and certainly not this website for encouraging you to buy an old banger in the first place. To buy, or not to buy, any particular car is entirely your decision. If you go in unprepared and ill-informed, don't bother to carry out a proper inspection and test drive, fail to check the paperwork, or expect to buy a perfect, good as new car for £500, you deserve all you get and more. That may sound harsh, but it's life, and trust me, if your newly purchased, fifteen year old Ford Sierra puts a conrod through the side of the block, the 'Watchdog' team won't return your calls.