Author: Timion, Matt
Publication:
www.gassavers.org
Date: 09/07/2005
So you're ready to get rid of your gas guzzling car and get a more fuel efficient car. You have read ads, searched websites, and have found that your choice is between a new Hybrid or an older car that you would expect to see a 16 year old in. The choice is obvious, isn't it?
The real question is WHY do you want a more fuel efficient car. This will actually answer which car you should buy. If you are buying this new car because you want to save the ozone layer, cut down on polution, etc., then you should buy the new car. Some of these cars are as close to zero emissisions as possible. The electric cars ARE zero emissions.
If you are buying this car to save on gas money, then an older car may be for you. Before you start talking about your car needing more maintenance than a new car, you are absolutely right. But we need to first establish a new way of looking at gas mileage. Instead of talking about how many miles per gallon your car gets, let's start talking about dollars per gallon.
Let's assume, for the sake of argument, that you want to buy a $20000 hybrid (that's actually pretty low for one of these things). Assume you are finance for 5 years at a low rate of 5%. Assume you have no money down, and have no trade in. These assumptions may vary, but they are typical of a lot of buyers. Your monthly payments will be $404.60. By the end of the loan you will have paid $24,300 in car payments. Assume you drive the "typical" 12,000 miles a year. over five years that is 60,000 miles. Your actual mileage may vary. Based on purchase price alone, you are paying 40.5 cents per mile you drive.
And then there is insurance. If you finance your car, you must pay full coverage, which will probably run you around $100 a month (more if you have a bad driving record). your $100 per month over five years will cost you an extra 10 cents per mile.
So with the new car you are already paying more than 50 cents per mile you drive. Assuming you get 50mpg in your new car, and assuming gas stays at $3/gallon, you will pay 6 cents per mile. so far we're at 56 cents per mile, and that's assuming we drive 12,000 miles a year. If you drive less, the price per mile goes up.
And then there are tune ups, oil changes, tire rotations, etc. I imagine you're looking at around 65 to 70 cents a mile after all is said and done.
Suddenly the new car doesn't seem as affordable.
Buying a used car for (let's get a nice one) $5000 will grant you a few priviledges. You will have it paid off much sooner, if not right away. let's assume you are able to buy this car for cash. While $5000 is a lot, it isn't unreasonable to assume that someone could pay cash for it. A $5000 car by the same standards will cost 8.3 cents per mile. Insurance will be half (if not lower) of full coverage. Add another 5 cents. The older car may not get the same fuel economy as the new hybrid, so let's assume you bought a car that gets 35mpg. At $3/gallon your cost per mile is 8.5 cents. This figure can change with tips and tricks found on this website. So we're paying about 22 cents per mile on a $5000 car. Add oil changes, etc and we might hit 30 cents per mile.
Accounting for all spending, a used car is cheaper with gas and service than a new car without gas, service, etc.
More ways to save money are to do your own oil changes, tuneups, etc. Not only is it faster, but it is much cheaper to do it yourself.
The bottom line is that if your goal is to save money, a new car is not the way to do it. The technology may be great, and the status symbol of driving a new Prius may be great, but while your ego may be bloated your wallet will not be.
If you disagree with me, please express your disagreement. I will happily consider your argument as I drive around in my 89 Honda Civic that I bought for $2000 (which I overpaid for) that gets 38 miles per gallon.
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