Buy the best car you can afford for cash. Old cars don’t depreciate as fast as new ones and sometimes even appreciate in value. I bought an old English car for $505 in 2006. It got another warrant this week (May 09). It still goes really well and is still worth at least $500. In 2000 I bought an old Ford Falcon in Dunedin for $580 and it served the family well for over 3 years including 3 trips to Northland.
I still have that car in the shed. Its a bit rusty but it still runs okay. I’ve seen several rougher ones for sale on Trademe recently for more than $1,000. So what that the Falcon only gets 22 miles to the gallon. Its simple technology with no computer controlled engine management system, fuel injection, power-steering, abs or traction control, so if it does break down its easy and cheap to fix. And even at 22 MPG it can still be driven a very long way on the price of a new car.