I just bought an 88 240 wagon with 260K miles on it. I won't tell you exactly how cheap this was, because it may be embarassing. It is the regular automatic, had dealer maintainance until 150K, and relatively good care since then.
It drives well, gets 26mpg, and burns absolutely no oil (from what I can tell after about 800mi). The only real problem is an obvious clunk apparently from the driver's side rear when driving at lower speeds over bumps. Already checked the rear tire, things in the stow compartments, etc.

1. Mechanically what is the likely cause for this and how much would it cost me?
2. Could I fix it myself (I'm reasonably mechanically inclined/able)?
3. What is the prognosis if not fixed immediately (something like continued annoyance, expensive eventual repair, death of the vehicle)

Thanks in advance.