Posted on 05/23/2008 12:48:59 PM PDT by KeyLargo
Trading in gas guzzler may cost you By Terry Jackson • Bankrate.com
Like a lot of people, you may be watching the price at the pump soar and wondering whether it's time to dump your current, less-than-efficient SUV, truck or car.
It's tempting to simply haul your 15 miles-per-gallon vehicle down to the dealership and drive out in something that gets 30 mpg or more. But that may not be smart, at least from a financial point of view.
People thinking of going this route need to take several factors into account.
For starters, your gas guzzler is worth considerably less as a trade-in than it was even six months ago. By some estimates, the value of used sport utility vehicles has dropped more than 20 percent since January.
Even if your current car is paid for, you're likely to incur new monthly payments on that fuel-efficient replacement.
Finally, it could take years to realize actual savings at the pump when other factors are taken into consideration.
Here's an example:
Suppose you have a two-wheel-drive 2001 Ford Expedition XLT. According to Edmunds.com, it is worth about $5,700 as a trade-in and gets about 16 mpg in city driving, although most owners of that model know real-world mileage is less than that.
At $3.70 a gallon for regular fuel, it costs about $97 to fill the Expedition's 26-gallon tank.
To cut that bill, the Expedition owner is looking at a two-wheel-drive 2008 Ford Escape Hybrid, which can likely be bought (assuming reasonable options on board) for about $28,000, plus taxes, title fees, etc.
The Escape Hybrid promises to deliver about 32 mpg in normal driving, double what the 2001 Expedition delivers. A fill-up of the Escape's 15-gallon tank at $3.70 a gallon would cost about $55.
But what are the real savings?
Assuming you own the Expedition free and clear and use the trade-in value as your down payment -- and cover the sales taxes and other fees in cash -- the Escape will come with a loan for about $22,300. At current rates, financing for 60 months means a monthly payment of about $439.
So let's add up the costs for a year:
If you stick with the Expedition and drive 15,000 miles a year, it will cost you about $3,500 to keep it filled with gasoline, assuming prices stay at about $3.70. If they go to $4 a gallon, the bill will be about $3,750.
In the new Escape, your annual fuel bill, assuming the same mileage and $3.70 a gallon, would be about $1,730, a savings of about $1,770 a year.
But the new Escape will cost you $5,268 in payments, not counting out-of-pocket fees and the value of the Expedition used at trade-in.
Even after factoring in the one-time federal tax credit that comes with an Escape Hybrid, swapping a serviceable gas-guzzler for a more fuel-efficient new vehicle is unlikely to provide a financial benefit for five years, when the new vehicle is paid off.
Of course, there are reasons to get a more fuel-efficient vehicle the go beyond bottom-line economics. They include concern for the environment and helping to reduce our oil imports.
And if it's simply just time for a new vehicle -- the old one is worn out, or you've budgeted to trade vehicles at this time anyway -- then by all means it would be foolish to not consider something that gets considerably better fuel mileage.
But if your prime motivator is the sticker shock at the gas pump, act with caution. While a new vehicle may help you save at the pump, it can significantly increase your overall costs.
Seven Ways To Save On Gas This Memorial Day Weekend
http://jalopnik.com/392957/seven-ways-to-save-on-gas-this-memorial-day-weekend
A good common sense article.
That elephant looks particularly uncomfortable to sit upon.
Maybe if 90% of everyone on the road wasn’t driving a gas guzzling SUV (that the vast majority of them don’t need for any reason except to impress the neighbors) the country wouldn’t be facing such a gas shortage to begin with.
I bought a $7500 Kia Rio so I wouldn’t wear out my $30,000 truck when I had to commute a 100 miles a day for a while. I kept it after that was over and now I’m glad. That car has kept my fuel bill at a manageable level. Now I only drive the truck when I need to do truck things. Other than that, it’s the Kia or my Harley.
Many dealers are stocking up on high mpg cars especially the used car side. These vehicles are bringing a premium at the auctions today with all the dealers looking for them. In reality the article makes good points about life cycle costing of the purchase but many if not most buyers fail to make that analysis, imo.
Yeah!
It's not like demand has gone up in China or India in the last few years. And certainly the nice people in the middle east are pumping the oil as fast as they can, right?
It's all the fault of the evil American SUV! /sarc
The nice thing about freedom is that we each get to choose what is best for us and not have it determined for us by Pravious.
Well, if the trends continue, who are they going to damn when rationing sets in?
Unless we start developing our domestic oil sources, and building of nuclear plants to replace significant oil and natural gas use, rationing is inevitable!
I will just laugh at my measly ration of 15 gallons a month and they can push their gas guzzling kiddy muscle cars home...
So then you are a Prius owner?
Overheard in men’s shower: “It’s MY Prius and I’ll wash it as often as I want to!”
What are you doing on FR?
Is is true that you can get wheels for it a any store that has grocery carts?
http://boomerang.blogs.com/optimist/2006/06/the_prius_gas_g.html
he Prius gas-guzzler vs. the SUV planet-saver
http://video.aol.com/video-detail/prius-jokes/2701653601
Maybe 50%. I recall that Congress made SUVs possible by making them "a truck". No clean air standards to meet—that smaller cars did have to meet.
It was a sop to Detroit that we're paying for NOW!
“The nice thing about freedom is that we each get to choose what is best for us and not have it determined for us by Pravious.”
What would a “Conservative” do?
My husband tried to use the high MPG to justify getting a motorcycle. I asked where he’d fit the car seats.
A Conservative would choose what's best for him and his family knowing that others will choose differently as their needs and wants dictate.
Tell him to buy a 2nd one so you will have a ride also....
lol....
I’m not attempting to curtail your freedom to buy a truck, pretend it’s a car, and spend twice as much fuel feeding it.
I’m just saying if so many people hadn’t bought those stupid things, there would be more fuel to go around, and it would be at a lower price for everyone.
I’m not arguing that anyone else tell you how to live your life.
I’m just asking if it is conservative to use more of a product that is currently in limited supply knowing that a portion of the money is going to your enemy?
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