Buy a fuel-sipper
An economical car will save you money on fuel and tax. That's not exactly news, but it can be difficult to work out what the difference will be between two models. In the showroom, the best way to compare is to check the fuel economy label in the window of each car. This gives you a comparative figure of fuel expense over 12,000 miles and assigns the car a 'green' colour rating based on its CO2 and its tax band. The database at www.vcacarfueldata.org.uk lets you search for the same information.
Choose petrol over diesel
In some cases, you'll save more by choosing the petrol version. Diesels are almost always more expensive, only making up the difference from fuel savings many thousands of miles later. The Ford Focus is a good case study. The 1.6 Zetec petrol costs £14,950, which is £1500 less than the 1.8 Zetec diesel. That'll buy you 308 gallons, taking you a further 13,600 miles at the average economy of 44.1mpg. Of course petrol is also cheaper than diesel at the pumps. The Focus tax will only be £40 extra in the new regime, and because petrol versions of smaller cars don't depreciate anything like as heavily as larger cars, you won't lose out on resale.
Stay credit-worthy
Borrowers branded a credit risk pay more interest on loans. So much so that the difference in the cost of a car loan for someone judged a credit risk could be as much as £2000 on a £10,000 loan compared to a low-risk applicant. To keep the APR levels down (below 10%), avoid applying for too many car loans, aside from the usual advice (pay bills on time). However you can also be judged a credit risk if you have no credit history - for example if you have no mortgage or credit card.
Avoid small diesels for motorway work
Small diesels rapidly lose their economy advantage when pushed hard on the motorway for long periods. Driving faster hits the economy of any engine, but that's particularly true of small diesels. The AA has calculated that driving at 70mph rather than 60mph increases fuel use in small diesels by 17.2%. By contrast large diesel engines only use 8.5% more. Petrol engines large and small are roughly equal at around 14% more. It means if you're doing a lot of motorway miles, the worsening fuel economy will prevent you from clawing back the extra cost of buying a diesel supermini over the petrol version, even with the tax advantage.
