Though it may soon go extinct due to inflation, the sub-$20K car market remains competitive in 2022 and 2023. My top picks are the Kia Soul for overall versatility, the Subaru Impreza for standard AWD, and the Hyundai Elantra for looks and standard safety equipment.

With record inflation, supply chain woes, and missing microchips, are automakers even capable of offering cars for under $20,000 these days?

They sure are!

And while the list of options may be dwindling, the segment remains competitive and the remaining contenders are worth considering for anyone car-shopping on a budget. From surprisingly loaded Hyundais to a loaded Subaru, a $15K Chevy to a spunky toaster-shaped crossover, there’s still a lot you can get for under $20K.

So without further ado, here’s my list of the best new cars under $20,000 for the 2022 and 2023 model years:

Best Overall Car Under $20K: 2023 Kia Soul 

  • Base MSRP: $19,790
  • Things to love: Peppy engine, superb visibility, 5x the cargo space of a compact sedan, well-equipped, 35mpg highway, reliable, cool styling, 8” infotainment system
  • Compromises: No safety tech on the base model, no more manual transmission offered

 

When I volunteered to drive my cousin’s new Kia Soul from Atlanta to Rhode Island I also made a preemptive appointment with a chiropractor. That’s not a dig against the Soul — I just thought 1,000 miles in anything short of a Rolls Royce would leave my spine in disarray.

And yet, cruising in the Soul was effortless. Kia’s plucky little toaster is surprisingly comfy, roomy, easy to drive, and well-equipped even at $19K. Its two best qualities are having an SUV-like 62 cubic feet of cargo space and insanely good outward visibility.

While it may not have the same luxury aspirations of the Hyundai Elantra or the Kia Forte, the Soul is more well-rounded and much easier to live with. Toss in some fun, funky styling and 35mpg and you have a winner for the best budget car for under-30s.

For Standard All-Wheel Drive: 2023 Subaru Impreza

  • Base MSRP: $19,795
  • Things to love: Cheapest new car with standard AWD, 36mpg highway, plenty of cargo space on the 5-door model
  • Compromises: Basic interior, slow, flannel sold separately

 

Love. It’s what makes a Subaru a Subaru. And even the cheapest ‘Ru offers a lot to love.

For starters, the Impreza is the cheapest new car you can buy that comes standard with all-wheel drive. That’s a big deal if you live somewhere snowy and could use the extra traction on your way to work (although I’d strongly recommend a set of snow tires, too).

The budget ‘Ru also comes with an optional manual transmission, which I applaud it for, but haven’t heard the best things about. Best to stick with the CVT (continuously variable transmission) that scores 36mpg highway.

I’d also recommend the 5-door aka “hatchback” version for a few hundred bucks more. With folding seats you’ll get way more cargo space, and if you ask me, Subarus look best as hatchbacks with roof racks.

It may not be too fast or fancy, but it’s a Subaru. And for many folks, that’s enough to make it lovable.

For Safety and Good Looks: 2023 Hyundai Elantra

  • Base MSRP: $20,500
  • Things to love: Aspirational looks, 42mpg highway, fast and fun to drive, impressive amount of safety tech as standard
  • Compromises: Interior may look spartan to some, technically not under $20K

 

OK, the Elantra technically sells for a tick above $20K. But it’s so good, and so close to the cutoff, that I thought it deserved an honorable mention.

Because first of all, just look at the thing. Design is subjective, but if you ask me, the Elantra is by far the prettiest car near $20K. Plus, it has the Fun Car Trifecta of decent power, a good transmission, and sporty suspension.

In terms of features, even the base SE trim comes with Wireless Android Auto™ & Apple CarPlay®, a nice 8-inch touchscreen, and a truly impressive array of safety tech. You’ll get forward collision assist, blind spot assist, rear cross traffic alerts, lane keep assist, lane follow assist, driver attention warning, and more.

In short, safety features that are options on a six-figure Mercedes are standard on the $20,500 Elantra, making it a safe (and handsome) bargain of the year.

For the Cheapest (Decent) Car Possible: 2022 Chevy Spark

  • Base MSRP: $14,995
  • Things to love: Cheaper new than most used cars, surprisingly fun to drive, tall driving position, folding rear seats lend practicality
  • Compromises: Slower than most house cats, not suited for long highway drives, rear seat passengers will probably get out and walk

 

Although the plucky little Spark has been canceled for the 2023 model year, plenty of 2022 models can still be purchased new from dealers (and quite cheaply, I might add).

Speaking of cheap, the Spark earns my award for Cheapest (Decent) Car because the actual cheapest car is the Mitsubishi Mirage starting at just $14,645.

But the Mirage is not decent, earning a dismal 2.5 out of 10 from Car & Driver for its horrid driving experience and poky, 78-horsepower three-cylinder barely fit for a motorcycle. I’ve never driven one and would probably only do so on a closed course.

So instead of the Mirage, for just $350 more you can upgrade to the endearing little Chevy Spark, which C&D gave a commendable 7 out of 10. Pulling from personal experience, the Spark is actually fun to drive, feels safe (which is rare for subcompacts), and offers plenty of practicality with its folding seats and 38 highway mpg.

It’s not suited for long highway drives, but if you’re just looking for something to zip around town on a shoestring budget, it’s a great choice.

For Fully-Loaded Under $20K: 2022 Nissan Versa

  • Base MSRP: $15,580 ($18,990 fully loaded)
  • Things to love: Surprisingly quiet and comfortable, loaded with safety tech, fully loaded (17” rims, leather steering wheel) under $20K
  • Compromises: Limited cargo space, tight backseat, super slow

 

One of the main drawbacks of shopping at the $20K level is that you’ll typically be choosing among the lowest possible trim levels. Instead of asking what do I want, you’ll be asking what can I live without.

Then, once you pick your SE trim, you’ll be left with a pinch of FOMO wondering if the upgraded Touring trim was worth it.

But even at the $20K level, there’s no FOMO to be had with the Nissan Versa. For just $18,990 starting you can have the top-level Versa SR with 17” 5-spoke aluminum-alloy wheels, sport cloth trim seats, remote start, LED headlights, and even a leather-wrapped steering wheel.

And the Versa SR isn’t just all bling and no talent. As a daily driver it’s surprisingly smooth, quiet, and comfortable, and sips just 40mpg on the highway.

So if you’re interested in getting the nice version of a budget car, the loaded Versa is yours for under $20K.

Which Sub-$20K Cars Didn’t Make the List?

The list of 2022 and 2023-model year cars you can still buy for under $20K isn’t very long, so I figured I’d go ahead and mention the rest (and why they didn’t make the cut!).

2022 Hyundai Venue

The 2022 Hyundai Venue, which starts at $19,000 on the nose, is basically a copy of the Soul that isn’t quite as good. Since Hyundai and Kia share parts, the Soul and Venue are actually the same car underneath mechanically.

But Kia has been making the Soul for longer and it shows — it’s prettier, more fun to drive, more comfortable, and just a tiny bit better in most respects.

That being said, if you find a killer deal on a Venue or just prefer the styling, go for it. It’s still a great little car that won’t disappoint you.

But on even terms and for a similar price, the Soul is better.

2022 Kia Rio and Kia Forte

The 2022 Kia Rio and Kia Forte, starting at $16,150 and $19,090 respectively, are both just fine, but hard to recommend over the Soul. Their toaster-shaped stablemate has better equipment, more cargo space, and will hold its value better. But if you’re not interested in the Soul’s better qualities and prefer a sedan (and an optional manual transmission), the Forte is a worthy option.

2022 Nissan Kicks

The 2022 Nissan Kicks is a slower, less reliable, and more expensive Kia Soul. Nissan’s basic and powertrain warranties are also both several years shorter than the Soul’s.

In a nutshell, the sub-$20K category remains competitive and not every car earns a recommendation.

But what happens if you’re willing to spend a little extra?

Is It Worth Spending a Little More than $20K on a Car?

In most cases, yes.

See, $22,000 is the new $20,000. And once you’re willing to spend that extra 10%, a whole new tier of significantly better cars opens up.

Case in point, the 2022 Mazda3 starts under $22,000 and that car is absolutely sublime.

 

Not only does it look good and come equipped with a boatload of standard equipment, but the Mazda3 is incredibly reliable and fun to drive. It also boasts the nicest interior of any car within its price range.

At $22,500, the Honda Civic “outclasses the Corolla in almost every way we can think of,” says Motortrend. Honda’s most affordable car is handsome, spacious, and even comes in a supremely practical hatchback form.

 

At around $22,000, your options for body style start opening up as well. Assuming you can find a dealer willing to sell you one at MSRP, you can score a Ford Maverick pickup truck for as little as $20,995.

 

If you can’t afford a Jeep or simply want something a bit more reliable, the superb Kia Seltos offroader starts at just $22,840. And like the Impreza, it comes standard with all-wheel drive.

 

And if you can stretch a little farther, you can score the best sports car of all time — the Mazda Miata — for just over $27,000.

 

The bottom line is this: A $20,000 car is like a $10 pizza. It’s perfectly satisfying and gets the job done. But once you’re willing to spend $15 on a pizza, you can get something much tastier and made with much better ingredients. If you can afford it, it’s worth it.

OK, But Can I Afford a $22,000 Car?

Let’s say you were settled on the Versa SR but now you’re thinking you’ll get the Honda Civic instead.

Can you afford it? Or will the leap in monthly payments be too much?

To find out, let’s plug some numbers into our Car Affordability Calculator.

Suppose you have an annual income of $50K before taxes and can get a loan at 4%. Punch those numbers into the calculator above and you’ll see that the most you should spend on a car is around $417 a month.

Is the car you want within range?

If we turn to our Auto Loan Calculator, we can see that financing a $20,000 car with a $2,000 down payment for 60 months leads to a monthly payment of about $354.

If we raise the MSRP to $22,000 without changing the down payment, our monthly payment rises to $392.

Granted, 60 months is a long term for a car loan, but hopefully this highlights how treating yourself to a much nicer $22,000 car than a $20,000 car may only raise your monthly payment by around $40 or so.

And if you buy used, both numbers will go down even further!

Summary

While you can still get a decent new car for under $20,000 in 2022/2023, your world really opens up when you reach that $22,000 mark or simply buy used. After all, cars lose 20% of their value in one year, so good things come to those who wait!

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About the author

Total Articles: 195
Chris helps people under 30 prosper - both financially and emotionally. In addition to publishing personal finance advice, Chris speaks on the topics of positive psychology and leadership. For speaking inquiries, check out his CAMPUSPEAK page, connect with him on Instagram, or watch his TEDx talk.