Having a limited budget doesn't mean you can’t have fun. Small cars today are plucky, refined, fun to drive and economical. And despite their size, many of them are still big enough to handle the school run and trips to the shops.

Small cars have it all, they’re better for your wallet, better for the planet and more fun on the road. But if you are in the market for a sub $20,000 car, what are the best options? Here we’ll look at our top seven picks for small cars in Australia in 2022.

Browse Car Listings Under $20,000

1. Toyota Yaris

The Toyota Yaris is one of the most popular compact cars in Australia, and with its perky styling, generous equipment levels, and zippy engines, it’s not hard to see why. This is a great way of getting from A to B on a budget.

Prices for the Yaris start at just $18,000, and you get a surprising amount for that. The interior is well-equipped and comes with all the latest tech, including a 7-inch touchscreen multimedia system with Bluetooth and voice recognition.

But the best thing about the Yaris is the handling. This is one of the sharpest handling cars in its class. Even the base model will put a smile on your face every time you jump behind the wheel. The little Yaris really makes you think, why spend more?


Fun handling

Excellent infotainment system

Fuel efficient engines

Lots of safety tech


Base engine lacks performance

The interior is small

2. Mazda 2

Mazda is on a bit of a roll at the moment. Their cars have earned a reputation for being fun to drive, well-equipped, economical and reliable, and the little Mazda 2 is no exception.

However, prices for the Mazda 2 start at $21,190, which is slightly above our limit thanks to a recent price increase. But have a word with your friendly Mazda dealer and I'm sure they’ll do a deal with you.

So what do you get for your money? Well, the Mazda has a spacious well-equipped interior that comes with all the latest safety tech as standard. And the little 1.5L engine offers spritely performance and is surprisingly smooth and quiet for such a small car.


A pleasure to drive

Refined engines

Lots of safety tech


Lots of road noise on motorways

A little expensive

A small boot

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3. Honda Jazz

Honda knows a thing or two about building small cars. Their first compact, the N360, launched in 1967 and became a bit of an icon. This went on to spawn other classics like the Honda Z and Civic. So what is it about little Hondas that makes them so special?

Well, the Jazz is a small car but it has plenty of room inside both front and back. And somewhat surprisingly, the 414L boot is bigger than some SUVs. The car also comes well equipped with lots of safety equipment as standard, including side curtain airbags.

The only downside to the Jazz, and the reason we have put it third in our list, is the rather dull handling. But not everyone wants a car that handles like a cart, so if you value space and comfort over handling, the little Honda might be right up your street.


Plenty of space inside

Extremely large boot

Lost of safety equipment


Dull handling

A little on the expensive side

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4. Kia Rio

The Kia Rio is the Korean manufacturer's attempt at taking on the Yaris and to be fair, it's not a bad effort. The Rio offers excellent value for money, has cute styling and comes equipped with plenty of the latest safety technology.

Inside the Rio is surprisingly spacious front and back and comes equipped with big car features such as rain-sensing wipers, auto window defog and a 60:40 following rear seat. There is also a decent infotainment system upfront to keep passengers entertained.

But on the road the Kia fails to ignite, the ride is dull and the steering lacks feel. The basic models also don’t come with the latest safety tech as standard. And servicing costs are on the high side. There are better small cars out there, but this is a good all-rounder.


Good looking package

Great infotainment system

Lots of space front and back


A bit dull to drive

Expensive servicing costs

Cheaper models lack important active safety kit

5. Suzuki Swift

The Suzuki Swift is one of the best-handling cars in its class, but it’s always been let down by a poor level of standard of equipment. However, that all changed last year with the latest update, which saw equipment levels brought up to industry standards.

The result is the Swift is now one of the best-equipped cars in its class. Active Safety Systems including Autonomous Braking (AEB), Lane Departure Warning, Adaptive Cruise Control (ACC), Anti-Lock Brakes (ABS) and a rearview camera are all now standard.

And it still retains everything that made the Swift great in the first place. The handling is crisp, the ride is smooth and the engines refined, but overall, the packaging is not up to modern standards, inside space is limited and the boot is on the small side.


Great to drive

Class-leading safety kit


Interior space limited

Servicing costs expensive

Price increase pushed slightly above $20,000

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6. MG3

MG has seen remarkable success since the Chinese-owned British brand was relaunched back in 2013. Modern MGs are renowned for their smart styling, well-equipped interiors and tidy handling. They also offer a generous 7yr/160,000kms warranty as standard.

The MG3 is the smallest car in the revised lineup and one of their best sellers. On the road, the MG3 has sporty handling, which should appeal to younger buyers, and the interior is spacious and well-equipped.

But it’s not all good news. The car would have featured higher up the list were it not for lack of important safety tech. Features such as Auto Emergency Braking should be standard on all cars these days and the car has yet to receive an ANCAP rating.


Sharp modern styling

Long warranty

Great to drive

Great value


Lack of safety tech

No ANCAP rating

7. Fiat 500

The final place in the list goes to the little Fiat 500. This car launched back in 2018, but it received a facelift in 2022 to help keep it competitive against more modern rivals from Japan and Korea.

The updated model gets LED headlights, a leather steering wheel, rear parking sensors and a new 7inch infotainment screen as standard on all models. Little else has changed, so the car keeps its cute styling, quirky interior and fun handling.

There is no mistaking this is a small car though. Space up front is tight for anyone over 6ft and rear passenger space is somewhat limited. So this is not a family car, but in our opinion, it's one of the best city cars you can buy right now.


Cute styling

Quirky interior

Perky engines


Compact interior

Small boot

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Buyers in the market for a small car have rarely had the choice they have today. An increasingly competitive marketplace means manufacturers are having to load new models with lots of big car features to keep them competitive.

The result is small cars today now benefit from all the safety tech of larger models. And with clever packaging, you don’t sacrifice much on space either. Small cars are also more fun to drive and easier on the wallet.

Park any of the above cars on your driveway and you’ll end up with a great little runabout that can handle the odd trip to the shops and even the school run. Who knows you may realise you don’t need that big thirsty SUV after all.

For a great deal on financing your new purchase, contact Australia's best reviewed finance broker on 1300 Credit (1300 273 348) today or visit CreditOne.com.au

Jordan Ballard

Jordan Ballard

Automotive Content Editor

Jordan is a car finance and automotive industry specialist at Only Cars. With over 20 years of experience with frontline and management roles in sales, finance and other areas, Jordan has an incredible understanding of the automotive industry. As Automotive Content Editor, Jordan loves sharing his passion for cars with the Only Cars audience.