Replacing your existing larger car for a smaller more economical model is a good idea for those who are looking to reduce their expenses. Smaller cars are cheaper to run as they use less petrol, cost less in road tax and of course, the insurance brackets are lower.

Going smaller doesn’t mean compromising on style or quality though, and there are several top picks available for under £5000 that you can buy without feeling like you are losing out on something.

The Fiat Panda 1.3 Multijet Dynamic has a diesel engine that enjoys 65.7 miles to the gallon, with five doors and plenty of space inside for the driver and passengers. There is plenty of boot space to accommodate a family-sized shopping load and can seat up to five passengers if the optional centre rear seat belt is utilised.

Cheap used cars are plentiful, but when purchasing one you must also know whether it will be reliable or not. The Ford Ka Zetec could be just the car for you. Solidly built and made to last, the Ford Ka has been in production since 1996. The boot space is small but extremely functional, with plenty of space inside the cabin to stop it from feeling claustrophobic, although it is known to be less economical on fuel compared to other makes of similar size.

Shopping around can afford you the luxury of finding the right used car for you. There are many good quality models for even the smallest budgets.

published: 29/11/2010