[MisterMower]

The whole point of buying the beater is so you can eventually get the car you want. It doesn’t make sense to buy multiple intermediate vehicles to get there.

Remove the second transaction and the associated $800 sales tax and it’s basically a wash. Live in a state with sensible tax rates and it’s a no brainer.

[gnicholas]

A $5k car is probably not very safe compared to newer cars. It might not hold as many passengers as you need (especially if your family gets bigger over time). Or it might get lousy gas mileage.

As for moving to a state with sensible tax rates, I think the moving costs or proximity to family/jobs would probably swamp the tax benefit for most people. But in the long run, people will surely take these factors into account (and perhaps are already, given recent trends!).