Help me optimize my car purchase

[aceyou]

The situation: My wife's $3,000 Nissan Maxima is totaled (don't worry, no one is hurt in any way, we are doing great).

The challenge: Find a car that optimizes for the cost of ownership when taking the following factors into account:

- Depreciation
- Insurance (we will not be getting full coverage)
- gasoline

Things that are of note that could influence your suggestion:

1.  We have a 3 year old and a 6 month old.  We don't plan to have a 3rd child.
2.  She drives about 250 miles per week on average. 
3.  A friend is a dealer and goes to a dealer auction in Chicago every week.  I may be able to go with him and bid on a car that way, but I'm not sure.
4.  I have lots of airline /hotel miles accumulated.  I could get a flight to a location out of the rust belt and buy a used car and drive it back to Michigan (all the used cars around here are all rusty underneath, which adds a ton to the cost of maintenance once cars get old)
5.  My wife's family has a dealership that they feel has treated them very well over the years that we can talk to.
6.  We can use craigslist, which is how I've bought my last 2 cars. 

Ok, this is your chance to make your opinion heard: What kind of car, what year, and how do you suggest I go about purchasing it:) 

[frugaldrummer]

I've had great luck with Honda Civics over the years, good gas mileage and very reliable.  I haven't owned any of the more recent models (mine were 80's/ 90's models) but my mom has continued to drive them and done well with her newer ones, and my son has had a couple of low-mileage late-90's Civics that have done well.  I got 250k miles out of both of my Hondas without much in the way of major repair costs.  Old Honda Civics retain their value because they are cheap to operate.

I own a Toyota Matrix now but it has cost me much more in repairs than I anticipated. I like it otherwise though and it gets good gas mileage and has room for my drum kit or vibraphone in the hatchback when needed.

[zolotiyeruki]

I live in the upper midwest too.  I've thought seriously about flying down south somewhere to buy a rust-free car and drive it back.  I'd be a bit hesitant to buy an older car up here, simply because of the rust issues.  However, if you've got a friend that goes to deal auctions, it may still be worth it to try.

Are you good with doing your own repairs? If yes, then the auto auction sounds like a good bet.  From what I've heard, cars at the dealer auctions often need a bit of work.

I'd stay away from the big dealerships--they always seem to be priced significantly higher.  Of the four cars we've owned over the last 12 years of marriage, three came from small, independent dealers and one came from a private seller.

The sweet spot for me is a late-90's Civic or Corolla.  New enough to have OBD-II and modern conveniences, old enough that their reliability is known and their price is cheap.