What’s cheaper, buying a hybrid or keeping the guzzler?

I ran into someone the other day who mentioned that they wanted to buy a car that gets better gas mileage. Their current car only gets about 17mpg and that makes for a nice chunk of change at the pump. My first question was “Do you have a payment on your gas guzzler?” The answer was “No.” So let’s ask the question, “What’s cheaper, buying a hybrid or keeping the gas guzzler?” The way I see it , it really depends on several factors which we were not able to explore in our abbreviated conversation.

How much does it actually cost to put gas in the guzzler and drive it? I figure at 17mpg with today’s price of gas it costs $0.23 per mile in fuel. In my world that’s about $2,530 per year (11,000 miles). Lets figure the cost of putting gas in the hybrid at $0.07 per mile x 11,000 miles = $836. Now lets figure the cost of borrowing $21,000 to buy it with a 5 year loan at 5.25%. That makes the total cost of the hybrid purchase $23,922. That’s $4,784 per year just in payments on the new car. So the first five years it costs you $5,620 per year!!!! So after 5 years of driving the hybrid you are $15,450 poorer! At that rate it would take 14 years to break even on the new hybrid. (This does not take into account if the gas guzzler could be sold or traded to recoup some of that money.)

What’s the moral(s) of the story?

• It almost always a better deal to keep your paid off car rather than buy a new one. Drive your car until it absolutely will go no further all the while paying yourself in a savings account. Saving money minimizes the amount of interest you will have to pay on your next car loan. (Or it will help repair the old car.)
• Consider buying an inexpensive used car that is fuel efficient. This will payoff much faster than a new hybrid even though the fuel efficiency isn’t as good.
• When asking for advice about major purchases, ask people who have a proven track record of smart financial decisions.
• Don’t rush into any kind of new payment. Ever. Under any circumstances. Think about it overnight at the very least.

There are situations where it is beneficial to swap a car. Here’s a little spreadsheet I put together to help you calculate if it’s a good financial decision for you. Download the Fuel-Financial_Efficiency_Calculator.xls Just for fun, check out this hybrid in the works from a California based company, Aptera.

How I Got 72 Miles Per Gallon!

Actually it represents a 30% increase in fuel efficiency. My 1993 Honda motorcycle typically gets about 55 mpg. But over the last few weeks I’ve been purposefully thinking about my driving habits and looking for ways to make them more efficient. Well my efforts have paid off. At my last fill-up the calculator said my mileage was 72.29 miles per gallon! Here’s what I’ve been doing. Much of this can easily be applied to 4 wheeled vehicles.

• The biggest improvement to my fuel efficiency was in finding times on my route where I could put it in neutral and coast. Sometimes the distance is so great that I could actually turn off the engine and roll quietly along. On my way home I can coast an entire mile with the engine off, right into my driveway. Many hybrid cars do this automatically.
• I’ve been turning the engine off at stoplights & stop signs where I expect more than a 20 second stop.
• I’ve not been showing off with my motorcycle, revving the engine or taking off at high speeds. Of course I’ve never done that. (I really did buy the motorcycle for the fuel savings. I don’t put hundreds of dollars worth of shiny chrome on it either and it’s actually much quieter than my lawn mower.)
• I’ve been driving at or below the speed limit. I get it’s optimum mileage at around 45 mph, just after shifting into high gear. I’ve not been worrying about my speed, but rather how hard my engine is working and how much gas I’m feeding it with the throttle. This usually causes me to drive below the speed limit.
• Watch it on up-hills. If you have ever ridden a bicycle up and down hills you know that you work much harder trying to keep your speed all the way up a hill. The same is true of your car. You’ll use more fuel trying to keep your speed up the hill, so let the car slow down a bit like you would do if riding a bicycle. Watch and listen to how hard your engine is working. Paying attention to even subtle hills on your route can help your fuel economy some. There are lots of hills around here which drain fuel efficiency. Hey, the name of our credit union is “Piedmont”, which means “foot hills”.

Earlier I said that I purchased a vehicle, my motorcycle, to get better fuel economy. But was it really worth it by the time I bought paid the money to buy it? I paid $1,200 for it. By the time I bought a helmet, insurance, registration, and rider safety class I had spent over $1,700. At the time I was driving a 16mpg SUV. Assuming that I could get at least 50mpg out of the bike I calculated that it would pay for itself after about 10,000 miles. Over two years I’ve driven it about 4,000 miles, so it hasn’t paid for itself as quickly as I would have liked. But it sure is fun!

Come to find out there is a name for what I’ve been doing. It’s called hypermiling. Just do a search on the Internet for “hypermilling” and you’ll find loads of information on how to increase your fuel efficiency. Some of it’s not that safe, so pick and choose what ways you can save gas carefully.

In wrapping up I leave you with a home made “Mad Gab” from my college friend Eddie T. … “Dry Foam Say Flea”