Katy Hamilton's mint condition 1987 Vauxhall Nova has been written off and the insurance company have only offered her £300. In total she has £700 to spend on a replacement, but is at a loss on what to buy and where to look.

Katy may not realise it, but she is very lucky. Ten years ago £700 would just about buy a rusty MOT borderline. Now £700 buys you reliable, largely rust-free transport that in some cases can almost be stylish.

The used car landscape, especially at the lower Bangernomics end of the market, has changed beyond all recognition. Lower new car prices have had a knock on effect on used car values, which have fallen through the floor. On top of that cars over seven years and with more than 60,000 miles on the clock are regarded as past-it and are largely unwanted in the car trade. Most important of all is that cars from the 1990s onwards are better built and just don't rust. This means there are a lot of very sound cars around at very low prices.

Those brave enough could buy at wholesale prices by bidding at auction, but this route is not for the novice. However, just by looking in local papers and regional editions of Autotrader Katy will be spoilt for choice. I have thumbed through the latest Midlands Yorkshire editions and found dozens for her.

A car for the head

If Katy loved her Nova so much then she might well adore its cuter successor in the shape of the Corsa. 1993 and 1994 1.2s are within her price range with full MOTs and relatively modest mileages in the 70-80,000 region. The Corsa has low running costs just like the Nova, is cheap to insure being group 2 and does at least 40mpg. Also it has proved to be pretty reliable, but Katy should avoid potentially tired ex-driving school examples.

There are other small cars out there and Katy may want a change and the Renault Clio is an attractive little runaround. There are a lot of mid 90s examples with full service histories and more than adequate 1.4 litre engines. Presumably Katy isn't a badge snob, so if she wants something bigger then the Skoda Felicia is a great car. It's a spacious 5-door hatchback and there are lots of 1996 models in the £600 bracket. A more stylish model might be the Seat Ibiza. In the Midlands a 1995 1.2 CLX in white, which may explain the price, was going for £695.

A car for the heart

Katy could have a BMW, Jaguar or Mercedes for just £700, but I don't think she wants the hassle or the higher insurance group.

However it is still possible to have a genuinely comfortable, well-equipped and classy car for less than £1000. One of my favourites is the Rover 200 series. This is a British version of a Honda, in effect a Rhonda. It is the best of both worlds with reliable Oriental mechanicals and old world Brit charm from the chrome grille to the bits of wood dotted around the interior.

It is a medium sized hatchback but it will be easier and smoother to drive than an old rattly Nova. The 216 has a responsive engine and is widely available from £400, but a mid 1990's example, which are around in large numbers, go for £695. Meanwhile a Volkswagen badge has a lot of kudos at this level and I found two 1994 Vento saloons, a Golf with a boot, within budget in Yorkshire. The mileage may be six figures but with a full service history and just one or two owners there is nothing to worry about. A solid and reliable car at a bargain price.

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