What sort of roads do you drive down? The big issue I found with the MG was that it has 18" wheels as standard that look cool, but the tyres are hideously expensive (£130 for T1-R's vs £30 for 15" T1-R's!) and it tramlines like a mofo on country roads.
Double your budget, piss off your wife, screw the kids, and get an S2000.
VWs are overpriced because they are very good cars (trying not to sound like blueflame :schwitz. I drive a VW Polo 1.9 Tdi since 2003. It has roughly 170tkm on the clock now, and beside servicing (service including oil change, etc. costs around 200 euro max., like every 40tkm), all i ever spent on the car was money for tyres, and two bottles of oil (longlife). I don't treat the car very well to be honest (it's my "work horse"), but it just keeps going. MPG is great too... when i bought the S2000 and drove it nonstop for a week, i was really shocked by how much money one can spend on fuel (compared to the polo, not like the S2000 would have an awful MPG).
EDIT: You might want to have a look at skoda's, the new models are very good. It might be hard to find one tho, since people usually don't want to sell them (at least in switzerland it's hard to find used ones).
Maybe not £1000 overpriced, but it's certainly a bit more than you'd want to pay for that car. It'd have to be in really good condition...
I think you're limiting yourself by only looking within 40 miles... You may not want to spend all day travelling looking at cars, but we've had people come from Scotland, Ireland, and even Germany () to buy a good car
Try and find a Miata that's within budget. You might get funny looks from time to time but you'll have a hoot driving it. You should be able to find a few for less than 4k, I've seen some for sale here in New Zealand for under 9k NZD (approx 4000 quid); for that price you'll be looking at the first-generation car with the popup lamps.
The first and most important rule when buying a used car is NOT to stretch your funds. As Murphy's law suggests, it's those cars you bought slightly over your pecuniar abilities that break down as soon as you have the keys and need very costly fixes to run again.
Other than that, I'd chose the car fitting your needs, and NOT the car you want. On an everyday basis it's just easier to live with something that's actually practical for what you do.
I for one do like to drive a tad sporty, and I have a dear love for big estate cars. Still, when it came down to buying a new car, I actually chose one I would'nt even have considered if I didn't think alot over it: a 05 VW Polo 1.2 with a whopping 53 bhp.
And here's why I chose it over a 200 bhp jag X for the same money:
1) It's cheap to run. Not only does the small 3 cylinder engine use hardly any fuel, the tax and insurance was 170 € vs 27 € for the Polo per month.
2) The Polo was newer, adequately equipped (automatic climate control etc.) and better serviced. It also had a low mileage 35.000 km vs 170.000 km.
3) I actually don't need to haul lot's of people or things around, thus I don't need a big car, let alone a station wagon. Still, the Polo's got 4 doors and surprisingly adequate space in the back row, so if I need to, I still have enough room.
4) Inner city parking.
Also, I was quite positively flummoxed that the small yet rev happy engine can keep up with the traffic at the lights. It's only when you drive on the Autobahn beyond the allowed 130 kph or steeply uphill that you really notice the lack of power. And honestly, who really needs 200 bhp in everyday road use?
So I say it again: get what you need foremost, and not what you want Save that one up for a time when you can really afford it, as it would only be a compromise between what you actually want and what you can afford anyway.
The trouble is, I've brought with my head numerous times, and everytime regreated it!!!!.
I NEED a 4 door saloon / hatch, I NEED it to be reliable, I NEED to know it will start when I turn the key and not breakdown, I would like it to be cheap(ish) to run and insure.
Parkers is good, but it doesn't matter if they value a car at 50p if you cant find one for under £2k.
You can't get a sub-100k ZT CDTI for less than £3.5k within 100 miles, irrespective of what parkers say.
Travelling 100 miles to find out it's a shed gets a bit wearing after a few times...
I would get a Mazda 6 if it fits your budget. It should be reliable, safe and spacious, etc and as far as I've heard it drives pretty good for a family saloon. Also, I personally think it's a good looking car, especially in black or silver.
My mate bought a later ('95) imported 1.8l mk1 in the limited edition laguna blue metallic colour, which had 42k miles on it, with 4 brand new tyres, all brand new brakes, fully adjustable bilstein suspension setup, front and rear strut brace, full service history from new, had just had a full service too, and 12 months MOT and tax for £2200, so to me, £4k seems far too high for a mk1.
My brother had a V6 ZT. In a lot of ways a lovely car, but I would not have been able to get on with it. Ergonomically it's not very good. For such a big car the driving position is very cramped, the wheel doesn't adjust far enough for reach, and if I sat close enough to it I couldn't turn to the wheel very far without my left knee getting in the way. I am 6'5", though, but it's not a problem I've ever had in any other car, including tiddlers like 106s and KAs etc.
Worse still is the pedal area. If you wear anything larger than a size ten you might find your toe fouls the "roof" of the footwell as you go from accelerator to brake, and if you wear anything except perhaps a ballet shoe, you won't be able to slide your foot to the left and off the clutch onto the foot rest, there's just not enough room. Irritating.
They feel a bit old fashioned, a bit old-tech, to me. Nice engine, and aside from the driving position faults it was quite nice to drive, though.