How to Buy an Economy Car

Tips on choosing the most economical car

Economy cars have come a long way in the last few years. The best offer low sticker prices and impressive gas mileage, plus the latest safety equipment, decent passenger space and a useful amount of cargo room. Here are some things that experts say to consider:

• Economy cars shouldn't feel too cramped. In theory, an economy car should be able to accommodate a minimum of four average-size adults without any serious problems. That's not to say they'll all be comfortable, but they should at least fit. Buyers should be aware, however, that small cars are geared more toward driver and front-passenger comfort than rear-passenger comfort. Check and compare the trunk/cargo space, too.

• Watch the options. Most economy cars are sold to younger drivers and first-time buyers who may be lured by bargain base-sticker prices but then find certain options too tantalizing to resist. Optional features can quickly add up, boosting the price into the midsize-car range. It's a good idea to have an idea of your essential features before you start shopping and to consider these when you evaluate sticker prices -- one model may have lots of standard features at a higher starting price, but a cheaper car could end up costing more if those same features are only available as added-cost options.

• Consider safety equipment. More manufacturers are adding standard safety equipment to their economy cars, but not all models are equal. Compare crash-test results and the safety specs of each vehicle to see if desirable features like side airbags and electronic stability control are included. Many economy cars don't come with these features as standard equipment, and a handful don't even offer them as options.

• Compare fuel-economy ratings. Economy cars are less expensive to buy, and they should also be cheaper to operate than larger cars. Some small cars are more efficient than others, so it pays to compare. Know that higher fuel efficiency may also mean lower horsepower, so make sure you're satisfied with the car's general performance and potentially slower acceleration before you hand over a down payment. While hybrid and clean-diesel cars will offer superior fuel economy, their higher purchase prices often reduce the operating-cost advantage. Many four-cylinder cars offer excellent fuel economy at a much lower price than a similarly sized hybrid or clean diesel vehicle.

• Some midsize sedans or station wagons may be a better fit than a compact economy car. Take a look at our reports on station wagons and family sedans, both of which include cars starting at less than $20,000. Sedans and station wagons are more comfortable for families, and many get very good gas mileage as well.

Time to consider a hybrid or electric car?

A few years ago, experts said pricey hybrids -- despite their better fuel economy -- still cost more than comparable nonhybrid cars in the long run. But that has changed.

In 2010, ConsumerReports.org revisited the question of whether hybrids and diesels can save consumers money over their closest gasoline counterparts. The conclusion is that certain hybrid  and diesel cars can save their owners money when depreciation, fuel cost, insurance, interest on financing, maintenance and repairs, and sales tax are taken into consideration. To reap these benefits, though, consumers must hold on to their cars for a number of years, the length of which depends on an individual model's factors like the price premium of the hybrid/diesel powertrain and the gain in fuel efficiency.

ConsumerReports.org singled out the 2011 Volkswagen Jetta TDI (Base MSRP: $22,095 to $22,995) as an economy car where opting for the diesel variant will save you money no matter what fuel costs because the "depreciation and fuel costs are significantly lower than [its] closest conventional counterpart." This should also apply to the very similar Volkswagen Golf TDI (Base MSRP: $23,225 to $23,885), the Jetta's hatchback cousin, which is a best-reviewed model for top fuel economy.

The 2011 Toyota Prius (Base MSRP: $21,650 to $28,320) and the 2011 Toyota Camry Hybrid (Base MSRP: $26,675) are cheaper hybrids that can save their owners money regardless of the price of gas. The study also found that the 2011 Honda Civic Hybrid (Base MSRP: $23,950) "begins to pay back in the second year" for a typical driver.

Interestingly, some fuel-efficient cars, like the best-reviewed 2011 Honda Fit (Base MSRP: $15,100 to $16,860) end up being cheaper to operate over a span of five years when compared with the nearest hybrid counterpart. For instance, the 2010 Honda Insight hybrid (Base MSRP: $18,200 to $21,490) wouldn't save a consumer money unless gas increased to $10 per gallon.

The editors at ConsumerReports.org note that "if saving money right out of the gate is important, there are many conventional cars that provide very good fuel economy and cost less than hybrids." For instance, the 2011 Ford Fiesta (Base MSRP: $13,320 to $17,120) in SFE trim and the bigger 2011 Hyundai Elantra (Base MSRP: $14,830 to $19,980) both achieve a 33 mpg combined EPA rating on regular gas -- and they cost thousands less than the least expensive hybrids on the market.

CarGurus.com concludes that "in the large majority of cases, the gas savings from hybrids did not overcome the substantial price premium paid at the time of purchase." Like ConsumerReports.org, CarGurus.com recommends to minimize the retail price premium paid for a hybrid and maximize the gas mileage differential between the hybrid and comparable gas counterpart. These two considerations will help consumers realize any possible savings.

This year the question isn't simply to hybrid or not to hybrid; now available are the all-electric 2011 Nissan Leaf (Base MSRP: $32,780 to $33,720) and the plug-in, range-extended electric 2011 Chevrolet Volt (Base MSRP: $40,280). Both models are available with a government tax credit of up to $7,500 but are still relatively expensive compared with the typical economy car. The Nissan Leaf has an estimated 100 mile range limitation (depending on conditions and driving style), which may not suit some drivers, and the car takes time to fully charge its battery. The Chevrolet Volt has an estimated 40-mile electric range, but after the battery is depleted, the Volt's gasoline-powered engine acts as an onboard generator to run the car's electric drive motors for more than 300 miles, which avoids the range limitation of the Leaf and other battery-only electric vehicles.

While there aren't any long-term test results yet, initial calculations show that the high base prices of these cars will prevent them from saving most owners significant amounts of money in a reasonable time frame. A Cars.com review of the Chevrolet Volt reasons that "if you want a car you can drive hundreds of miles a day with exceptional gas mileage, the Prius remains your best option." For now, it appears that the first-generation electric cars and plug-in hybrids are best for those that want to minimize gasoline usage and pollution at any cost. The frugal are likely to be better served by hybrids or the most fuel efficient economy cars.

See our separate report on hybrid cars for more on hybrid technology and choices.