Economy Vs Compact – The Car Difference

What’s the difference between an economy and a compact car, and which should you buy or rent? Our economy vs compact comparison guide has your answers.

If you’re looking to buy a car or perhaps book a rental for a trip and want something that’s small yet has enough room for several people and luggage, your best bet is either an economy or compact car. But which should you get?

Better yet, which one is the bigger and roomier vehicle? How many people can they carry comfortably? How do they drive and handle? Which one is more fuel-efficient?

As you can see, economy and compact cars differ in several key ways. We wrote this detailed economy vs compact car comparison guide to help you choose between the two and dispel any confusion you might have.

Difference Between Economy And Compact Cars

The terms “economy” and “compact” are used by carmakers, car rental companies, and government agencies to refer to two distinct vehicle size classes. Let’s look at what each one fully entails.

What Is An Economy Car?

In pop culture, “economy” or “economical” in the automotive sense is a term used colloquially for cars that are cheap to buy and operate. To that end, economy cars are usually the smallest, most affordable vehicles offered by automakers and many rental companies.

Their diminutive size limits cabin space, so engineers have adopted many innovations and conventions over the decades to maximize what little real estate they have to work with. 

This explains why most economy cars have a hatchback body style — the most space-efficient vehicle design — and prioritize function over style more than any other size class. 

Many well-designed and packaged models can comfortably seat two full adults and hold one medium suitcase and several smaller carry-on bags, not to mention your grocery. 

Most come with rear seats; however, this second-row is often too cramped to comfortably accommodate anyone but small children.

Because they are small and lightweight, economy cars are usually powered by small, fuel-efficient engines and have a small turning radius, qualities that make driving and parking in tight urban environments easy.

Unfortunately, their small engines can feel underpowered, especially when driving on the highway and trying to pass another vehicle.

Also, since economy cars are designed to be affordable and cheap to operate, it’s only natural for them to be less refined than other vehicle size classes.


Here are the key points you should know about economy cars:

  • Door Count: 2 to four 4 passengers doors
  • Seating Capacity: Up to 4 people; comfortable for 2 adults at the front and two small children at the rear
  • Cargo Capacity: Enough space for a medium suitcase and several small bags.
  • Fuel Economy: Averages around 25-30 mpg or better in combined city and highway driving.
  • Price to Buy/Rent: Lowest price and rental rates.

Bottom Line

Economy cars are often the smallest, most affordable vehicles offered by a carmaker or car rental company. Though short on space and often cheap-feeling, they are very fuel-efficient and easy to maneuver. 

What Is A Compact Car?

Modern compact cars are a step above economy cars in performance, refinement, and size.

On top of having roomier interiors and a larger cargo area, they also typically have four doors and five seats. The second row is usually spacious enough to comfortably accommodate both children and adults, making these cars a lot more suitable for a family or small group of people.

As you would expect of a vehicle of a higher price point, compact cars are available with more tech, convenience, and driver-assistance features than economy cars. 

It’s not uncommon for them to have premium features as leather upholstery, heated steering wheel and seats, and a capable infotainment system, as well as collision-avoidance systems such as forward-collision warning, automatic braking, and even adaptive cruise control.

Not only does this make compact cars easier to live with, but it also makes them safer to drive.

Granted a compact car can be considered an economy car (affordable, cheap to operate, etc.) in the marketplace, it’s usually the case that such a model has been stripped of all but its most basic tech features.

Finally, while the average compact car is larger than a typical economy car, it’s not that much bigger. You can expect comparable driving and handling characteristics, albeit with more refinement, and a more powerful engine that manages to deliver similar fuel economy.


The defining features of compact cars are as follows:

  • Door Count: Typically 4 passengers doors
  • Seating Capacity: Up to 5 people; accommodates 1-5 adults or adults with small children comfortably.
  • Cargo Capacity: Big enough for a large suitcase, a medium suitcase, and several smaller bags.
  • Fuel Economy: Differs between models, but averages around 25-34 mpg or better in combined city and highway driving.
  • Price to Buy/Rent: Similar price and rental rates as economy cars, but a little more space, power, and features.

Bottom Line

For just a little bit more money, a compact car will provide similar fuel economy, driving feel, and maneuverability to economy cars while giving you more passenger and cargo room to work with.

Economy Vs Compact – Which Should you Get?

Now that you have a better idea of what economy and compact cars are and how they differ, we’re going to pit them against each other to help you determine the best one for your needs.


Most people buy or rent a car based primarily on price. While the price difference between economy and compact cars is often not very large, those looking to save money may find an economy car to be the best fit, assuming it meets all their other needs.

Not only are these cars more affordable but they are also cheaper on gas and, in many cases, insurance. This makes them great for long, fuel-intensive drives or trips.

Of course, price should never base your decision only on price. There are other important factors to consider.


The size of the car should be your most important decision criteria. After all, what’s the point of buying or renting the cheapest car possible if it feels cramped and uncomfortable for both you and your passengers or doesn’t have enough room to carry your cargo?

An economy car may offer sufficient room if you don’t intend to carry people in the second-row seat or a lot of cargo. Otherwise, the extra interior and cargo room provided by compact cars makes them the more practical choice.

Compact Vs Economy Car FAQs

The answers to these common questions about economy and compact cars help alleviate any confusion you might still have.

What’s The Difference Between Economy And Compact Car Rental? 

The difference between an economy car and a compact car boils down to size. Compact cars are a bit bigger and roomier, more powerful, and feature-rich than economy cars.

Both vehicle classes are easy to drive and park and very fuel-efficient.

Which Is Better, Compact Or Economy Car?

Both vehicle classes are generally very affordable, easy to drive, and fuel-efficient, but compact cars are bigger than their economy counterparts and, therefore, more suitable for carrying four adults.

The front seats of economy cars can comfortably seat two adults; however, the rear seating area is often too cramped to be comfortable for anyone but small children.

What Is The Smallest Rental Car?

The smallest cars offered by rental companies are generally the cheapest and most fuel-efficient models to rent. Examples include minicars such as the Chevrolet Spark, Fiat 500, Nissan Micra, and MINI Cooper.

Final Thoughts

The biggest difference between an economy and a compact car is size. Economy cars are smaller and nimbler, more fuel-efficient, and more affordable; however, they offer less passenger and cargo room, have weaker engines, and are less refined.

Compact cars provide more versatility. For just a little bit more money, you get more room for passengers and cargo, more tech and convenience features, a more powerful engine, and better refinement, as well as comparable driving dynamics and fuel-efficiency to economy cars.

When my wife, three kids, and I go on vacation, we often rent a compact car or something larger just because we want to make the trip as comfortable as possible. But families consisting of two adults and two small children may find an economy car to be more than adequate.

We hope you found our economy vs compact car comparison useful. If you want to learn more about both vehicle classes, read our detailed guide on the different types of cars.