There is no possible way that you can't get a bike to handle your needs (7 Km Round trip/ day?) for much less money than even a beat up car. Heck -- at the current price of gas where I am ($2.50/ gal) you could pay for a decent used bike by not buying 50 gallons of gas. Not to mention insurance, oil changes and other maintenance, etc... And the cost of maintenance on a bike, while not zero, is much less than a car (I think my bike shop charges $60 for simple tune up, $85 for a tune up and wheel truing, and $110 for tune up, wheel truing and chain/drive train cleaning, For perspective, that kind of money will get you one tire, mounted and balanced.

Further, a beater car will a) burn more gas than you expect; b) need more maintenance than you expect; and c) be less reliable than you expect. So the $1000 you might spend up front on a beater car would buy you a really nice daily commuter ($400-500 is more than enough for the kind of riding you're talking about) lots of accessories (lights, fenders, racks, etc...), and still have money left over for whatever floats your boat.

Buy a bike from Craig's List. Find a friend who knows bikes to shop with you.