Sarah Cornell, 27, an editorial assistant from Peckham, east London, runs a red 1994 Peugeot 106 1.4 which she is quite happy with but is thinking about a slight upgrade. She believes her car is worth about £1,400. She would like "the same but a bit bigger", say, a Corsa. The problem is that she is not able to put much extra towards a replacement. Is there a clever way to get a little more room for not much extra cash? Although she recently had a prang, she has a protected full no-claims bonus.

If Ms Cornell is right, and her Peugeot is worth £1,400, that is a fairly small amount and allows little room for trading up. To make the most of the value in her old car she should consider selling it privately before resorting to a part-exchange deal. Exchanging one car for another at a dealer certainly reduces the hassle, but you will not get the best price.

Dealers offer trade values and on older cars that can be just a few hundred pounds. By cleaning the car and writing a good classified advertisement Ms Cornell should be able to realise £1,400, rather than the £600 to £700 a dealer might offer.

With the car sold, Ms Cornell has two options. First, she can buy a replacement car outright, although the problem is that it which may not be in better condition than her Peugeot and could well be older. Or Ms Cornell could buy a better car if she is prepared to borrow money. Hire purchase, personal contract purchase, or simply going to the bank and taking out a loan are just some of the options. You must always keep an eye on the annual percentage rate and most importantly the amount you will end up paying for the car.

A car for the head

So let us make the most of Ms Cornell's £1,400 budget and shop around for a larger hatchback and buy outright. The Fiat Punto is small but spacious, a nice drive and more reliable than you might imagine.

A 1994-95 1.1 55S can be bought for about £1,200 with an average of 60,000 miles. A Honda Civic 1.5 from 1993 may have a high mileage, but it should still feel very solid and should have a service history. If that is too old, the Hyundai Accent is an inoffensive if cheap-feeling hatchback. Lowish mileage privately owned 1.3s registered in 1996-97 are about £1,300.

Ms Cornell could trade up to a bigger Peugeot; a 1994 model of the 306 can sell for £1,200 to £1,300, but be warned, because it recently came bottom of a reliability survey. Maybe a better model is the similar-sized Seat Ibiza 1.4. A 1995 example should just be £1,400, but because of Ms Cornell's tight budget I would prefer her to have at least a couple of hundred pounds in reserve in case of problems. But if she has already sold her car the cash should help her negotiate a better price on the replacement.

A car for the heart

If Ms Cornell wants a Vauxhall Corsa, why not buy a new one? It is a practical, well-equipped little runabout, and to celebrate Vauxhall's centenary they have a range of special offers. Zero per cent interest is certainly attractive but Sarah would need to find a 40 per cent deposit which could be a problem. But go online at and the latest special edition Active models are down from £8,500 to £7,515 on the road. Air-con, alloy wheels and electric windows are part of the package. Ms Cornell can buy a Corsa Active 1.0i for £7,515.00, by putting down a £1,400 deposit, pay a first instalment of £287.38 and 34 monthly payments of £197.38 and a final payment of £282.38. Effectively the charge for credit will be £1,165.63 and the annual percentage rate is 12.4 per cent.

If Ms Cornell cannot manage that, then there are lots of other competitive deals around, DC Cook Direct 0870 606 43 43 have discounted Corsa 1.2 SXis available at 8.6 per cent apr which can translate into £28.91 weekly payments. Alternatively, depending on mileage and specification, a 1993-96 1.2 Corsa is available within Sarah's £1,400 budget.

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