Buying used is the way to go for certain things. Do not buy a used engine from ANYONE unless you know them personally and know how they ran that engine. Servos is another thing that I would not by used. Outside of those two things used is a great way to save money and get into this hobby. You could probably get into it for $700 to $800.
1/8 scale nitro racing is not cheap and once you've invested $500 in an RTR you will end up upgrading rather quickly (two $100 servos right off the bat). I ran an RTR for 3 months and the first two weekends of racing and practicing I dropped $300 in servos and shock towers. Now, I was racing at the Nitro Pit which is a huge track with motocross style jumps. I was competitive with the RTR, that's not the problem with RTR cars, they will win races, but were not built for serious racing.
If you are not ready to spend at least $800 to get into 1/8 nitro racing look at 1/10 scale electric racing. It's a little bit cheaper to get into, but will be alot cheaper over the course of a racing season.
The slash class is very popular at a lot of 1/10 scale tracks and that is meant to run box stock RTR style right from the box. Check those out as well.