I'm graduating from Engineering this year and looking at buying my
first car. My first question is should I buy a new or used car? What
are the advantages/disadvantages? My price limit is about $20 000.
What is a reliable car that is good on mileage for that price?

It's no contest:

Always buy a 'good' used car if the price is right and if it comes
with a service history and a suitable warranty.

Buying a new car is for folks with money to burn.

However, it is important to buy an 'honest' car which can be fully checked out.

If you buy a new car, when you drive it off the lot you lose about
$10,000 right there (on most mid-priced cars). To me, that reeks of a
bad business decision. Buy a good used car. If you want an
almost-new/perfect car, buy from a dealer a car that's about 3 years
old-- it will probably be a leased car and will be in tiptop shape,
because the leasers have to keep it under a certain mileage (maybe
36,000) and keep it in great shape physically or they have to pay fees
when they turn it in.

Cars with a great reputation are Toyota, VW and Audi.

BMW's are BAD NEWS: very expensive to maintain.

Hey probono:

VW really?

I've heard terrible things about the upkeep needed to maintain VWs and
I believe that "Consumer Reports" listed them as having one of the
worst repair rates of any type of car.

Perhaps the British division has done a better job?

Iryan:

Check out the latest Consumer Reports Buying Guide and see what cars
they rate as the best/least expensive to maintain.  They even have a
list of used cars and how much it costs to maintain them. Very
interesting.

VW's have a good reputation? I think that they are nice cars but even
many VW owners will admit that they are problematic.  I would say go
with Honda or Toyota.

The fact is any car (new or used) purchased from a dealer is going to
lose much value after you drive it off the lot.  Just look at the
dealer vs tradein values listed on kbb.com.  Many "good" 1 to 2 year
old cars are a better value than new, but not by much if you purchase
from a dealer.  $10,000 lost off the lot is a bit of an exagerration
unless you are talking about a rather high end car.

Hondas are the best vehicles on the market....

However, be extra careful...they get stolen lots...

I know......

Steph53

Toyota Corolla or Honda Civic for the tried and true. They hold their
value so well, you won't save much if you buy used, so get one new.
The 2007 Mazda 3 got a 10 rating on consumer guide, which is the
highest of any normal car. The toyota echo is also nice, and very fuel
efficient.