Have begun to look for a 2001-2003 Prius, since my budget is $7000.00 Since this is new territory for me, I'm interested in any information that would be valuable in learning any advantages between the 01, 02 and 03 models.
I own a 2010 so I can't help on that issue, but I think other typical used car buying guides apply which I'm sure you're savvy: condition, fit/trim, cleaniness, have it checked by mechanic. i.e. the usual buyer beware stuff. It's always nice to see previous maintenance documents, too. Best wishes as you check out the market. Finally, give a search at Toyota Certified Pre-Owned. You never know, you may find a gem.
I'd go for a gen 2 Personally, I'd up your budget and go for a 2nd gen (2004-2009). I wish I could find Patrick Wong's post basically discouraging folks from getting a 1st gen mainly due to potentially high repair cost, if something expensive fails. Patrick's one of our resident repair experts. I did dig up a list of potential problem areas at http://priuschat.com/forums/gen-ii-...nfo-advice-buying-older-prius.html#post596012. If you do go for a 1st gen, it'd be GREAT if the HV battery were replaced already since the new one would have plenty of life left. It's even better if that, the transaxle and steering gear were replaced already, as well. If you buy a 2nd gen and since you're in CA, the 2nd gens and beyond have a 10 year/150K mile warranty on the HV battery and 15 year/150K mile emissions warranty, provided it was bought, registered and operated in CA (or other CARB states). 1st gen's HV battery warranty was only 8 years/100K miles. edit: I dug up one of Patrick's adivisories: http://priuschat.com/forums/gen-ii-prius-main-forum/87100-new-member.html#post1218681.
cwerdna has pointed you to the correct thread, which wll probably lead to a sense of...sobriety. I'd still take the "bucket'o'problems" NHW11 over many or most others 2001-2003 era if I were in the market. That may say something about my sobriety, but as far as we can tell a large proportion of NHW11s are still huming along with happy drivers at the wheels. I reiterate that a thorough examination of the candidate vehicle's service history would be essential. Of the years, the 2003 is said to have improvements in potentiometer sensors involved in the accel pedal, steering torque plate, and throttle position sensor. In any case it seems that 2003s present fewer of these pot problems. Also the inverter coolant loop pump may have been improved in 2003. That was one bug/feature that didn't make it on to Patrick's 2008 list of concerns. Now, can all of that be managed? Yes, if you feel like it. Otherwise, look for another car, or for a few more $thousands and consider a used NHW20 as per cwerdna. There you will find a different, but shorter and cheaper, list of bug/features. Others could populate that list better than I, but right offhand you have the coolant storage thermos and touchscreens with poorly soldered connections.
Regarding the touchscreens on 04 and some 05s, Prius MFD was a failure analysis. I hear refurbs can be bought for ~$500 and pEEF IIRC can fix them for less. IIRC, at least one here on Priuschat got someone good w/soldering to fix it for really cheap.
Re: I'd go for a gen 2 So you do agree the 10year long term reliability of the Prius is a hit or miss in spite of what CR says.