The problem with cheap guitars is that they're not made of quality wood and the hardware, including tuners, tends to be junk.
If you're just learning chords, it may not be that big of a deal, but you can get a decent guitar for around $100 on the used market. What you have to watch for though are warped necks, high frets, busted bridges, etc....all of those things affect the action. (how far the strings are off the frets and whether or not they ring freely or buzz against the frets as they're plucked)
Check out the entry level guitars from Guitar Center in the $100 price range and see if you can find one from a reputable brand. You may be able to find them cheaper elsewhere too if you find the model numbers, but the key to buying one from a more reputable brand is that it will have resale value when you want to move up to something better. You also tend to get better hardware and they may be made of better wood. Just don't buy one with a weird finish. Try to stick to something that allows you to see more wood grain than just something they sprayed solid with lacquer.
Rogue are the cheapest, but they've been around. Yamaha and Fender are under $200 for their entry-level options....Washburn also makes quality instruments.
(filter by price range)
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