When in the market for a small car, the first consideration is whether to buy new or used. Buying a brand-new car certainly has its benefits. Most notably, new cars can have the very latest safety gear and engineering improvements -- a particular concern with small cars. And new cars are backed by a comprehensive factory warranty. You don't have to worry about potential service problems or concealed collision damage. Further, you can have your choice of color, trim line, and options.
The crucial drawback with buying a new car is rapid depreciation. A new car can shed a third of its value in its first two or three years on the road. If you have financed the new car with a low down payment, you can easily find yourself "upside down" on the loan, where you owe more than the car is worth.
Used cars can be a welcome alternative. The used-car market is about three times the size of the new-car market, so there are certainly plenty of choices. One of the best strategies is to find a car that you like that's only two to three years old. Such a car has already taken its biggest depreciation hit, which works to your advantage, but it should still have most of its useful life ahead of it. Modern cars, if soundly maintained, can stay on the road a long, long time. Rust, for example, isn't nearly the problem it was years ago. Solid-state electronics have eliminated the need for a lot of regular servicing.
The key to selecting a good used car is to focus on reliability, even when a prospective automobile is still covered by its original factory warranty. Look for a car that has done well in our Reliability survey. For many years, the reliability stars in our records have mostly been Japanese-nameplate models, especially those from Honda, Scion, Subaru, and Toyota. But a handful of domestic and Korean models have been on the rise, too.
CR's reliability data are no guarantee, of course, but they do carry the weight of probability. If you shop for sedans with top-notch reliability, the odds are more in your favor. But every used car is unique. A careful prepurchase inspection remains a vital part of the process. If you do research and take care in the car selection, a used small car can save you significant money in the long run.
See our used car buying guide
Check our Car Brand Report Cards to learn more about each automaker.