Since I'm on the subject of used cars, let me talk to you about the side benefits of leasing. Every three years (generally) people turn in their lease cars. It might behoove you to check the local dealerships for any off-lease cars they might have. If they have a sharp sales manager, he'll sell it to you for a little more than the residual value of the vehicle.
We're talking relatively low mileage vehicles that have been just turned in. I know there are some lucky folks out there who got the last 4 of my wife's cars when they came off lease. Think about getting a $40,000 vehicle for a little over $19K, that was taken care of, with only 25,000 miles on it. Granted, they're V-8s and with the price of gas nowadays, but you get my point. Good cars like this come off lease every day and banks are happy to give 5 year loans on 'em.
Figure the $800 bucks you were prepared to pay for a car, the first couple oil changes and a brake job on the cheap car (necessary expenditures), and you've got a pretty good down payment. You can find a good $10,000 car out there that will last you a long time (if you change the oil, say it with me, EVERY 3000 MILES) and won't break down every other week.
It's just a thought if you can swing it. It might save money in the long run. A 3 year old Honda Accord, for example, should give you 10-12 good years with minimal repair costs. Same with Toyota's Camry and Nissan's Maxima. The Taurus (make sure it's a 6 cylinder) is no slouch either. Good reliable vehicles all that take a small bite out of your wallet at the pump and the repair shop.