How to get a new car for the price of your old banger

With the latest, astonishingly fuel efficient engines delivering 60 plus miles per gallon, a six-year freeze in fuel duty and the lowest interest rates in a generation, there has never been a better time to buy a new car. Add into the mix the new breed of small city cars available at around £9,000, with warranties up to 7 years and it may be time for a new car.

black smart brabus carThe starting price of a small car is now as low as £120 per month on a three-year lease and this is for a range topping VW UP! There are three million or so new cars sold in Britain each year and we at have a strong suspicion this figure would rise higher still, if those running older cars took time out to do the maths. The surprising fact is, that it costs very little extra to run a brand-new car than an old one! Right, we’ve said it so now we need to prove it.

Let’s start by investigating the new City Car. These small efficient cars are designed principally as urban transport but don’t be fooled by their dinky looks! Many City Cars have four doors, turbo charged engines and enough space for the family. Clearly, they are not suited to permanent residency on the motorway system but happily chug along at 70 MPH and occasional forays onto the motorways of Europe are certainly not beyond them. All the mainstream manufacturer’s now produce at least one car in this category, so the prices are extremely competitive. The Fiat 500, The VW UP!, the Hyundai i10, the Ford Ka, the Renault Twingo, the Nissan Micra, the Toyota Aygo and of course, the ubiquitous Smart Car are all examples of City Cars.

For those of a technical bent the City Car is often powered by a three-cylinder petrol engine, producing around 70bhp. Yes, four-up they may labour a little up a steep incline but for most purposes are nippy and fun to drive. Whereas their larger cousins tend to offer diesel engines for maximum fuel efficiency the City Cars are mostly petrol and offering around 60mpg. So, the first saving you are likely to make, if you trade in your old car is on fuel. A ten-year old Fiesta 1.4 litre, for example, will delivery around 40mpg so, on 10,000 miles per year, fuel will come in at around £440 cheaper (Click here for fuel calculator).

Now, and this is the real issue. If you lease a car, the smart option is to ensure you are covered by the manufacturer’s warranty for the duration of the contract. Although Kia offer an astonishing 7- year warranty the norm is still three years so we recommend the default new car lease should be 36 months. Car tax, and breakdown cover are usually included within your lease payments so all you need concern yourself with is the monthly rental, insurance, fuel and an annual service. For most, the three-year lease should mean you have no additional maintenance costs as tyres, brakes, battery etc should comfortably last the three years of the lease. If you cover 10,000 miles a year your monthly budget may look something like this:

Lease payments £117.00*
Fuel £76.00
Service £7.50
MOT £0
Car tax Included
Warranty Included
Maintenance £0
Insurance £15.50 **
Breakdown cover Included


£216.00 /month

* You will need to pay a deposit which may be financed by selling or trading in your current vehicle
** Insurance based on 35- year old male with family and 2 children with 5 years + no claims discount
Leased cars to include road fund licence (car tax) and breakdown cover.

The impression most people who run an old car hold, is that it saves them loads of money. But does it? Unless you are a mechanic who can nurse the old thing along without frequent trips to the garage it is not normally true. Let’s look at our ten-year Ford Fiesta. Typically, a car of this vintage will have covered 80,000 miles or more and maintenance will be an ongoing issue. Tyres, brakes, batteries, hoses etc will all need replacing on a regular cycle and of course the annual MOT could easily unearth other costly problems. Furthermore, if you run a ten-year old car you should always recognise the possibility of more serious mechanical problems which could mean the car being scrapped entirely.

So, based on 10,000 miles a year the real monthly costs of running this Fiesta may look something like this:

Fuel £109.00
Service £12.00
MOT £4.58
Warranty /risk factor £25.00**
Maintenance £20.00***
Car Tax £11.66
Insurance £18.00****
Breakdown cover £4.00


£204.24 /Month

** If you don’t currently pay for a warranty this figure represents the risk element of a major failure of your car
*** Maintenance based on need for tyres, brakes, battery, cam belt etc averaged.
**** Insurance based on 35- year old male with family and 2 children with 5 years + no claims discount

Looking at these figures you may, very reasonably, be tempted! In the example we have used, you could be sell your Fiesta for around £1,000, pay a deposit for the lease car and have £300 change! One of the ironies of leasing is that the better quality the car, the less you generally pay. Sounds daft but because a lease is calculated on cost and residual value, cars which retain their value well, are often the least expensive to lease.

Remember too, that if you run your lease alongside the manufacturer’s warranty your motoring costs are predictable; so, no nasty surprises! Anyone who runs a car out of warranty, knows the risk and how one repair can easily cost you the equivalent of a two-week holiday in the sun! The figures we have used above are representative and no means worst case scenario.

Check out current lease deals here
Check out value of your current car here
Call us to discuss 0800 799 9180

Cost of leasing other cars

Perhaps you are interested in the concept of swapping your old car for a new one but are looking for a larger or different style of vehicle. Below we look at some of the best lease deals in various categories. You should remember that lease deals come and lease deals go and although these are accurate at the time of writing (March 17) you should search here for today’s best deals.

Category City Car Small Hatch Crossover Saloon MPV SUV Hybrid /Electric
Recommended VW UP! Skoda Fabia Mazda CX3 Skoda Superb Citroen C4 Picasso Nissan X Trail Toyota Prius
Approximate monthly rental £120 £125 £220 £230 £285 £305 £350
Approximate monthly fuel £76 £74 £93 £70 £65 £74 £48
Monthly finance & fuel Cost £196 £199 £313 £300 £350 £379 £398

All prices above are indicative and correct at time of publication. Each of the above is based on three months’ rental as a deposit. Click here for current deals.