With the credit crunch biting and expensive car sales collapsing most buyers are looking to smaller cars to save themselves some money. One such car that should be considered is the Peugeot 107 in new special edition Verve form.

The 107 is one of a family of three cars which also includes the Citroen C1 and Toyota Aygo. Available in both three and five door form, the 107 was designed from the outset to be a cheap car to buy and run. Available with a one litre petrol engine the little Peugeot is capable of returning 61.3mpg on a combined driving route whilst only emitting 109g/km of CO2, putting it in the £35 a year tax bracket.

From the outside the Peugeot differs little from its cousins, the smiley front bumper setting it apart from the others. With a wheel at each corner and virtually no overhang, especially on the rear, the overall effect is a cute look and a chirpy personality, before you even get in.

On entering the car, you are greeted by a refreshingly different interior, designed again to not only be cheap but to funky and functional. Various parts of the instrument binnacle and door trims have coloured plastic inserts to lift the predominantly black hew of the main dash board. A rev counter is mounted in a separate lolly pop like pod above the clear large speedo, and the main heater controls are placed on a translucent panel that illuminates when the lights are on. All of this adds up to give an interesting facia look, one with character, one that makes you smile. On the down side however, the cheap construction can be seen in the quality of the plastics. It all feels solid enough, it’s just the types of plastics used and the finishes are inferior to those that can be found on some of the 107’s competitors.

Features on the Verve model include CD / Radio with MP3 input, air conditioning and 50/50 split folding rear seats. This last feature could be quite important of you intend on carrying anything other than a weeks shopping, as the boot is relatively small. Passenger space however is a different matter and for a car with such small external dimensions the 107 is quite large inside, easily roomy enough to seat three adults and a child in comfort.

The seats themselves again are built to a budget, and subsequently can lack support both latterly and in the lower back on longer journeys. That said, this is a car that has been designed to live in the city and do shorter runs, rather than long motorway treks. This fact is also evident in its refinement, where the Peugeot can be a little noisy and busy on a long run.

Right from start up, the little three cylinder engine makes a throaty noise, reminiscent of a Porsche 911. It comes as surprise to hear this sort of thing in a modern car, especially as loud as it is in the 107, but it is not an unpleasant sound and makes an interesting change to the soulless four cylinder engines that are found in most small cars. As you move off the next thing that strikes you is how punchy this three pot engine feels. It may only have 67bhp but down to its light weight and free spinning nature the car feels a lot quicker than the figures suggest.

When the first corner arrives, the little Peugeot continues to surprise. Despite being on narrow 155 width rubber, the car grips tenaciously, erring towards understeer at the ultimate limit, with only a small amount of body roll. Because of the thinner tyres, the car also has a feeling of connection with the road that is lacking from a lot of modern cars.

Despite the sporty handling, ride comfort is also very good for a car of this size, the suspension soaking up the majority or urban bumps with no drama. It’s only when you get on to a dual carriage way that the 107 gives away its light weight, tending to be jiggled around by the road at higher speeds. Another disconcerting element of the light weight is the cars stability in high winds or more importantly when being passed by larger vehicles such as lorries or coaches. It is in no way dangerous, it can just be a little foreign to drivers who are used to larger, heavier cars that have dominated the market in recent years.

Prices for the Verve start at £8145 on the road for the three door model but part of the package is also a low rate finance deal of 5.9% APR, meaning that after the initial deposit of £1100, the monthly payments work out at just £133, a cheap new car in any ones book.

Overall then the 107 isn’t perfect. It’s a little too noisy, uncomfortable on a long run and the boot isn’t very big. To say that it’s a bad car though would be missing the point. The Verve has a purpose in life. It is a town and short journey car and if you consider it as such and not as an all rounder that is designed to cruise across Europe, then its addictive little character shines through, something that is increasingly rare in modern vehicles.