We show you how to choose the right car and downsize effectively with our expert guide.

Downsizing to a smaller car doesn’t always mean missing out on looks or performance. We reveal how to cut your tax, insurance and fuel costs in style.

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1. Fuel economy

Drive a car with better fuel economy and it should run further before it needs re-filling. A cars mpg – miles per gallon – figure indicates the average number of miles it can reach on one gallon of fuel.

Some cars with great average fuel economies include the Volkswagen Polo BlueMotion (74.3mpg), Seat Ibiza Ecomotive (76.3mpg), Ford Fiesta ECOnetic (76.3mpg) and the new Smart Fortwo CDi (85.6mpg). Anything above an average 50mpg can be considered good.

Add some fuel-saving techniques to your driving style and you could save hundreds of pounds on fuel each year.

2. Road tax

Road tax for cars registered after March 1, 2001 is based on how much CO2 they emit.

Tax bands range from tax-free band A for cars which emit less than 100g/km of CO2, to band M which costs £405 a year for cars which emit more than 255g/km of CO2.

Go for a car in tax band D (£120) or lower to save money. There are loads of great cars in tax band B which cost £35 per year to tax – less than £3 a month.

3. Car insurance

Every UK car is classed in one of 20 insurance groups, with 1 being the cheapest and 20 the most expensive. You’re more likely to get a better insurance quote if you own a car in the lowest group.

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4. What’s your car worth?

You can check adverts on autotrader.co.uk or in your local magazine to get an idea of your car’s price, but be aware – others may not have priced their cars correctly.

Auto Trader has teamed up with valuation experts Glass's to give you the most trusted and accurate industry valuation report.

Find out what YOUR car's worth with Glass's Guide

5. How to sell

Once you’ve decided what car to buy, you might want to think about selling your current one.

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You’re likely to get more selling your car to a private buyer than if you trade it in, and you can offset the money you make against the price of your next car – just as a dealer would.

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6. How to buy

New

Buy a new car and you can choose from a huge range of models, with the exact specification you want.

There's the opportunity to get some great offers – including finance deals and free accessories and warranty. You’ll also get a manufacturer-backed warranty to give you peace of mind if something goes wrong.

The credit crunch has caused lots of new offers, making now a great time to buy.

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Used

Take the used route and you’ll get your next car for less without visiting a dealership – and you’ll lose less money through depreciation.

Give yourself a budget and stick to it. It’s also important to protect yourself from fraud when buying or selling a car – visit our safety and security centre to find out how.

View footage of the green Volkswagen Polo BlueMotion:

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