What car to choose? The smallest!
Economy plays a big role in choosing a car, whether it's new or used. And many car buyers search far and wide for the cheapest option among their shortlisted candidates. But here's a savings tip: go one size down.
The trend is called downsizing, and it's a well-known approach in all sorts of financial contexts: it's a proven method for reducing costs, and it absolutely applies to cars too. Whether you're looking at new or newer used cars, the rule of thumb that a smaller car means lower costs holds true with remarkable consistency.
This is most clearly evident when you look at the running costs: all else being equal, a smaller car will travel further per litre of fuel, costs less in vehicle tax, is typically cheaper to insure, and is also cheaper to maintain.
Since it's also cheaper to buy and depreciates less in absolute terms, it's actually one of the very best pieces of savings advice you can keep in mind when considering a specific car: could I manage with a smaller car than the one I'm looking at now?
Try searching for different small cars and see their price ratings
The difference between 'nice to have' and 'need to have'
Of course, the car still needs to meet the basic requirements you have for it — otherwise, almost no financial savings can compensate for a frustrating daily experience where you regret the choice. But there is a difference between 'nice to have' and 'need to have' in a car, whether it's about equipment, engine size, or the car's basic dimensions. And while it IS nice to have plenty of space, you should look at how often you actually use all the car's capacity. If it turns out that it only happens during the family's winter and summer holiday, then you should at least consider whether a need that occurs twice a year justifies the higher costs of a larger car.
Pros versus cons
Of course there are other advantages to a larger car — often the comfort, equipment, and build quality are better, and those factors should be weighed up too. But if you're serious about fuel economy, environmental impact, and lowest possible running costs, then downsizing is one of the best methods around — perhaps the only savings approach where you get everything at once. And looking objectively at the numbers, the downside is very, very small: a little less space that — most of the time — you probably weren't using anyway.
Alternatives
In recent years, there has been a flood of extra-fuel-efficient versions of many standard models, but their low consumption is often the result of refined technology that makes them both more expensive to buy and quite likely more expensive to maintain in the long run.
So it is another way to save a bit of fuel, but compared to true downsizing it remains a more expensive solution — or rather, a kind of treating the symptom rather than the cause.