Best new cars for under £40,000

There are plenty of great new cars available under £40,000. Check out some of the best on offer, and consider saving with a used car

Simon Ostler
Aug 19, 2021

There are two reasons why you might be interested in buying a new car that's worth less than £40,000. The first is there are so many great models available that make it seem a bit unnecessary to spend anything more. The second is that £40,000 is the threshold at which road tax becomes more expensive.

So if you fancy getting the absolute most for your money, and being sensible with the finances as you do so, you can do little better than opting for a car within this price range of around £35,000-£40,000. The list of cars on offer is mouth-watering to say the least, with every choice packed with the latest technology, built to last and designed to indulge those that drive them.

You'll find cars of all shapes and sizes here, too. Whether you're after a large SUV, a sporty coupe or a hot hatch you have options, and in many cases the very best examples of each will be on offer.

But you don't have to throw your cash at a brand new car, there is another alternative that will see you bag an even better deal on these cars. You could instead look into the option of a nearly new or used car deal, often saving yourself thousands of pounds in the process, and not really missing out on anything if you don't mind driving a car that's already seen a bit of use.

Read on for our pick of the best new cars for under £40,000, and if you like what you see, you might be tempted to take a look at the great value used car deals available on all of these models right here on BuyaCar.

Best cars for under £40k

1. BMW 5 Series

Our pick BMW 520i SE
List price £39,275

The chances are drivers with around £40,000 to spend will have heard it said before that the BMW 5 Series sets the standard by which other executive saloon cars are judged. We make no apologies for saying as much again.

It feels better to drive than any rival. The interior is relaxing, with supremely comfortable seats. And space is more than generous enough to let five adults sit in relative comfort.

The tough choice for buyers is to know which engine will best suit their needs. For around £40,000, there’s a choice of a four-cylinder petrol, diesel or – if you can stretch to it – even a plug-in hybrid version. To our mind, the petrol, 520i model makes most sense for private buyers who don’t cover more than 12,000 miles a year. The 520d diesel is ideal for company car or high mileage drivers, while the 530e plug-in hybrid is a more costly alternative to both that’s good for reducing company car tax.


2. Audi A5 Coupe

Our pick Audi A5 Coupe 40 TFSI Sport S tronic
List price £39,485

The Audi A5 Coupe takes the blueprint of a spacious luxury saloon and does away with some of the space. The outcome is one of the more stylish cars you can buy at this kind of price. The A5 is based substantially on the Audi A4, the German brand's popular family saloon, but it features only two doors instead of four, and a much lower roof that slopes down at the back to give off a much more muscular and sporty appearance.

So what you may lose in terms of space of rear-seated passengers, you gain in two-fold in pose ability and cool-factor. But the A5 doesn't just look better, it's a much more engaging car to drive, too. It sits 43mm lower to the ground, which has a big impact on its agility round corners, and it also means you're sat closer to the road, which gives a better sense of speed.

To fit within budget, the more basic A5 Coupe in Sport trim is the one to choose. We say basic, but this is still a high quality and luxurious cruiser that will make any journey an absolute pleasure. The list of equipment onboard includes a pair of heated sports seats at the front, three-zone climate control, a 10.1-inch touchscreen media display with sat-nav and the Audi virtual cockpit - a customisable 12.3-inch digital instrument display with voice control.

The 40 TFSI engine is a 2.0-litre petrol engine producing 150hp bringing up 0-62mph in 7.1 seconds. It's not the most powerful or economical engine available in the A5 range, but it's the best on offer for less than £40,000 and you'll find it provides a solid balance of performance and fuel economy. Coupled with the seven-speed S tronic automatic gearbox you can expect to average around 45mpg.


3. Kia e-Niro

Our pick Kia e-Niro 64kWh 4+
List price £39,645

The Kia e-Niro has quickly become one of the most popular electric cars on sale in the UK, and it's no coincidence. Much like the rest of the Kia model range, the e-Niro represents excellent value for money, with a balanced mix of quality and affordability. Not to mention its stature as a practical and spacious SUV that makes it just about the perfect fit for any families looking to invest in an electric car.

The e-Niro excels in every aspect it aims to. It's an electric car that can travel up to 282 miles on a single charge - more than most at this price range - and comes with as much tech as you would expect to find in something that costs £10,000 more. Add to that the fact it's spacious and comfortable, yet simple and easy to drive, and it's suddenly very easy to see why this car is so popular.

Prices for the e-Niro start from around £32,000, but the very top spec '4+' model is also available within our £40,000 budget, so if you have the money to spend, you might as well fill your boots. It's equipped with a 10.3-inch touchscreen media display with sat-nav, an eight-speaker JBL sound system, heated front and rear seats, ventilated seats and front and rear parking sensors.


4. Volkswagen Golf GTI

Our pick Volkswagen Golf 2.0 TSI GTI
List price £34,175

The latest version of the Volkswagen Golf is well established now, and the new Golf GTI is also here to provide some spice to hot hatch fans. While it might have been overthrown as the top Golf in the range by the 320hp VW Golf R, there's still plenty of reasons to opt for the mere 245hp GTI. If, however, you're utterly sold by the Golf R, you won't need to stretch the budget by much - it's currently on sale for £40,025.

But that's £25 too much for us, so the GTI is the one we're interested in, and to be honest, we'd probably still be interested in it anyway. One of the key differences is the fact that the Golf GTI is available with a manual gearbox, while the Golf R is not. Anyone looking for an engaging and hands-on experience will be leaning towards that manual option.

In terms of performance, there's no denying 320hp is more exciting than 245hp, but the less powerful Golf GTI is still capable of 0-62mph in just 6.4 seconds, which is likely to be more than enough for all but the most extreme drag racing situations. The GTI is also more economical than the R, so you can expect cheaper fuel bills and cheaper road tax.


5. Honda CR-V Hybrid

Our pick Honda CR-V i-MMD eCVT AWD SR
List price £36,770

This isn’t the most frugal SUV in its class. The Toyota RAV4 hybrid is more efficient, while most diesel-powered SUVs can better the Honda’s fuel economy of 38.7mpg. However, in this age, not everyone buys a hybrid for outright efficiency – some drivers are now skeptical of what’s coming out of the exhaust pipe of diesel-powered cars and would prefer to switch to hybrid or electric because of it.

The hybrid system pairs the petrol engine and electric motor together, or allows the car to be driven on electric power alone for a short distance. It’s complemented by a pleasingly smooth ride comfort, which makes this a great cruiser and ideal for long trips with the family aboard. Also helping in this respect is the larger interior, which houses more space than most rivals.

You can afford the flagship EX all-wheel-drive version, which is comfortably under £40,000 and comes with all the bells and whistles, although we’d be tempted to save the money and pick SR trim.


6. Range Rover Evoque

Our pick Range Rover Evoque D165 AWD MHEV R-Dynamic Auto
List price £37,565

The Range Rover Evoque is the supermodel of the SUV world, born to strut its stuff on the catwalk – albeit, in this instance, a catwalk that consists of suburban roads, school run routes and supermarket car parks.

A new generation model (pictured) is now rolling into showrooms, which gracefully blends the striking proportions of the original Evoque with the smoother, flush surfaces of its big brother, the Range Rover Velar.

Our pick of the range would be the diesel-powered, 150hp model in S trim, with an automatic gearbox, as it comfortably undercuts a budget of £40,000. More frugal than before, thanks to the adoption of a mild hybrid system, big things are expected of Land Rover’s most popular model.


7. Alfa Romeo Giulia

Our pick Alfa Romeo Giulia 2.0 Turbo Sprint
List price £36,595

Time for a touch of Italian flair. The Alfa Romeo Giulia is one of a group of sporty saloon cars that mixes style, performance, technology and comfort. It was introduced into the market among rivals such as the BMW 3 Series, Mercedes C-Class, Audi A4 and Jaguar XE, so the Giulia had to be good, and it is.

Not only does it look absolutely fabulous, you can identify yourself as a genuine motoring enthusiast by pointing at the Alfa Romeo badge on the front. Despite this being the most affordable version of the Giulia, it still features the same 2.0-litre turbocharged petrol engine as the rest of the range, albeit with 200hp as opposed to 280hp, but it's still good for 0-62mph in 6.6 seconds, which competes well with equivalent alternatives. 

As a performance car, the Giulia is excellent to drive. It handles smoothly round corners, and the steering feels well weighted and well balanced when you're making small adjustments. It's well set up for cruising, too, with a smooth and receptive eight-speed automatic gearbox and fuel economy pushing towards 40mpg, so the Giulia is as good as a weekend runabout as it is a weeklong commuter.


8. Volvo V60

Our pick Volvo V60 B4 R-Design
List price £39,420

Once upon a time Volvos were considered so square – in every sense – that the children of mums and dads would sink in their seats, trying to hide below the window so no one on the school run would see that they owned a Volvo.

Today, Volvos are arguably some of the coolest cars on the road. Take the Volvo V60. It’s one of the most handsome estates there is, and the beauty runs further than skin deep. The interior all soft-touch surfaces, natural textures and stylish details, creating a haven of calm that could make you almost forget that there are a couple of wet, muddy dogs in the spacious boot.

Volvo now offers the entirety of its catalogue in hybrid or electric form only, and the least complex mild hybrid versions are the most affordable - they're available from some £10,000 less than plug-in hybrid variants. For that reason the B4 mild hybrid version of the V60 is the only we're going for here, as it sits nicely within our £40,000 budget.



Latest best cars & vans

  1. Best cars with adaptive cruise control

  2. Best cars with reclining back seats

  3. Best cars with three full back seats