How Important is Fuel Efficiency When Purchasing a Car?

Julia wrote in a few days ago with the following questions.

My question is about cars, inspired in part by your post this morning. We have a gas guzzling 2004 Ford Expedition in very good condition. There is about $3,000 left on the note, leaving us with about $10,000 in equity, should we sell it for Bluebook value. We could have it paid off in about 4-5 months. Our note payment is $408, rounded.

For fuel we spend no less than $300/month, often closer to $400 and beyond. We live in southern California, so we do drive quite a bit. Luckily, my husband has a company car, and for the most part we use that on the weekends. About $100/month is taken from his paycheck by the company to account for personal miles. It’s a predetermined amount by the company and does not reflect our use of the vehicle.

We are a family of four (two boys, aged 3 and 1 year) and can’t decide whether to sell the truck (now or when it’s paid off) and get something more fuel efficient or, keep the the truck free and clear. I don’t suspect a Prius will be able to accommodate our young family (strollers, etc.) but we would like a hybrid if it makes sense financially. My concern is that by selling the truck for a more fuel efficient vehicle the money we save in gas would simply go towards a new car payment, registration, and insurance.

Guess what, folks? It’s time to run the numbers!

A 2004 Ford Expedition gets 13-15 mpg in cities and 17-19 mpg on the highway. I’ll estimate that yours gets right in the middle – 16 mpg overall. If you live in an area with gas at $3.50 a gallon and are spending $400 a month on gas, that means you’re putting about 1,800 miles a month on your vehicle – $400 divided by $3.50 gets you 114.3 gallons of gas a month, and at 16 miles per gallon, that’s just about 1,800 miles.

So let’s go with that. Let’s say you replaced your Expedition with a 2008 Ford Escape Hybrid, which gets 30 mpg on the highway and 34 in the city, so for you we’ll average it at 32. I chose the Escape Hybrid because it’s comparable to the original in size and storage which you probably still need, but much more fuel efficient. If you drive 1,800 miles a month, that means you’ll only burn about 56 gallons of gas with this model versus the 114 gallons you were burning with your old one. That’s a savings of about $200 a month – you’ll basically halve your monthly gas bill.

Now, is that $200 a month worth it over the long haul? Over the course of five years of ownership, that $200 a month difference adds up to $12,000. The Ford Escape Hybrid has a base invoice price of $24,734. So, if you get $10K in trade-in on your current vehicle, you’ll likely be paying somewhere in the range of $15K for the new vehicle. Your break even point from the gas savings is then at about the six year mark. Of course, there are advantages in having a new vehicle – it’s going to be more reliable at first, for starters, and you’ll likely save on the maintenance over the next six years versus the older vehicle simply because you’ll be starting your maintenance schedule fresh and new.

If I were in your shoes, I’d probably be willing to make that switch. You’ll be returning to car payments for a while, but your monthly gas bill will be halved. After the new vehicle is paid off, though, you’ll be doing very well. There are compelling arguments both ways, though.

What about just adding another new car to the mix? Another compelling option is to simply add a highly fuel efficient car to the mix and using that as often as possible. Let’s say, for example, that you could get a 2004 Honda Insight, which gets an incredible 60 miles per gallon city and 66 miles per gallon highway, and you’re able to use it for 70% of your driving. That means that 30% of your driving would be at 16 miles per gallon in your expedition and 70% would be in your Honda Insight at 63 miles per gallon, giving you an overall effective gas mileage of 49 miles per gallon. Over 1,800 miles in a month, adding the Insight and driving it 70% of the time would save you 75.8 gallons of gas each month, and at a cost of $3.50 for a gallon of gas, that’s a savings of $265.17 per month on gas.

I played around on Kelley’s Blue Book and found that you can likely find one of these Honda Insights for about $16,000. If you walk into a lot with no down payment and get a 36 month loan at current rates, you’ll leave with a payment of $525.38 for the next 36 months, meaning that each month for the next three years will cost you $260.20 each month. After that, though, you’re in very good shape. Plus, you now have the redundancy of another vehicle that will likely be able to seat your whole family, so if one breaks down, you’re not hoping for a loaner or renting a car.

Note that I’m not figuring insurance or licenses into either case. I don’t know what this family would be paying for insurance or for licenses, but in especially the case with the extra car, this is an additional cost. Julia and her family should figure in these costs before making a choice for themselves.

What’s my conclusion? Fuel efficiency is becoming very, very important, especially with a high-mileage driving situation. It makes sense to look for a more fuel efficient car that could also be cheaper to insure.

I think this family, given that they’re putting 1,800 miles a month on their car, should strongly consider making a change. Even if gas prices stick to their current levels, it ends up being a good deal for them over five or six years. If gas prices continue to go up, they’ll be in tremendously good shape in the future, especially if they couple it with some changes in habits.

My advice for them is to go for it. Once they get past the three or four year mark (depending on their payments), they’ll be in much better shape in terms of fuel efficiency. If they choose to drive the car for many years past that, then fuel efficiency will have saved them a lot of money.

If you enjoyed reading this, sign up for free updates!

Loading Disqus Comments ...
Loading Facebook Comments ...

88 thoughts on “How Important is Fuel Efficiency When Purchasing a Car?

  1. Dee says:

    This was an interesting breakdown.

    I live in SoCal too so I understand about driving, but before Julie runs out and buys a new car I think her family should seriously re-evaluate its driving habits. You’re talking about adding 5 years of payments for what could be a short-term problem.

    If, after spending the next month trying as many gas saving techniques as possible, it still seems that she’s just going to need a more efficient car then I would look more toward getting a late model used hybrid/car (as you usually advise, Trent).

  2. Johanna says:

    I don’t know much about cars, but isn’t the Insight a two-seater? I don’t see that as being very practical for a family of four.

  3. Mike L. says:

    You’re math assumes that the cost to you is ~15k for the hybrid. But you’re not counting the cost of giving up the equity in the old car.

    It seems to me that, from a purely economic perpective, it makes much more sense to keep the old vehicle than pay $25k for a new one.

  4. Mike L. says:

    And one should also consider that if you keep the old vehicle for a few more years, there could be better and/or cheaper technologies for fuel efficiency at that point.

  5. Julia says:

    I’m Julia from the post. Thanks again, Trent, for going through the numbers for me.

    Dee, we were doing quite well slowing down our gas consumption until our oldest started preschool. Now that he is in school I have to plan my errands for after I drop him off and before my youngest son takes his naps, which leaves me driving all over the city. I actually don’t put 1,800 miles a month on the truck. Gas in my area is closer to $4, unfortunately.

  6. I just wish a new car company would be created that believes in getting rid of the oil based car. Most of the current car companies have business models that rely on oil, oil changes, maintenance issues, filling stations, etc…

    Why did GM kill the EV1 car years ago? Most people would benefit from a car that could be used for short errands and short drives to work since that is what most of us do on a daily basis.

    Watch Who Killed The Electric Car? if you are interested in this subject.

  7. Alexis says:

    I’m also curious about the company car – at a cost of $100/month for personal use. Is the family getting $100/month usage out of the car? How much personal driving is actually done with that car? What kind of milage does that car get? Would it be easier to just use that car more – and the truck less? At least for parental use (trips to the store that don’t involve kids, etc)

  8. Curtis says:

    I think the idea with the Insight was that they would use it whenever they could, i.e. when they didn’t need to haul around all the kids and strollers. When they had to take the whole family, they’d drive the Explorer. I’m not sure if 70% in the Insight is realistic, however.

  9. flawed says:

    I agree with Dee. She should also evaluate if she really needs such a big car.
    Many strollers can be folded to fit into a normal trunk.

    Also keep in mind that kids grow older and won’t be needing strollers anymore in a few years. So even if you really need a big truck now, you might not need it in a few years and then exchange it for a smaller car that gets comparable or better mileage than the Escape Hybrid that Trent mentioned while being substatially cheaper to buy.

  10. Julia says:

    Alexis,

    We use the company car at every opportunity, which means exclusively on the weekends. It’s a 2008 Ford Taurus.

  11. Julia says:

    Mike L.: I hear where you are coming from, especially in regards to changing technology. The flip side is that the Expedition will be worth even less, as it is so fuel inefficient.

  12. Anne says:

    Seems these days every family “needs” an SUV to haul around the kids and their SUS (sport utility strollers). How about a station wagon and a simple collapsing umbrella stroller? Do you really need your stroller to have a cupholder?

  13. Dee says:

    @ Julia

    Ah, that makes sense. It seems you’ve done what you can. Essentially you are paying $800/month for the car. Ouch!

  14. Mike L. says:

    InvestEveryMonth: There are companies trying to tap into this market: http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/07/cccars107.xml

    I don’t know if those specific technologies will be successful, but it’s proof that the free market is reacting to the increasing demand for fuel-efficiency, and is even looking beyond the hybrid, which is at best a transition technology, which is why I caution jumping into one. It could be that in 5 years the hybrid is the technology we are trying to phase out.

    Julia, it’s true that the Expedition will be worth less. On the other hand, even if it’s worth 0, it’s saving you a car payment if you keep it. The calculation is complicated, I admit. Your old car will continue to depreciate, but also remember that when you buy a new car that car will depreciate at a must faster rate (even considering the fuel economy, in my opinion). My advice would be to sit down and see how the decision would affect your finances 5, 10, 15 years from now (it get’s hard to predict the further out you go), but remember to count the car as an debt/asset, and not just consider the monthly payment.

    And of course, all of this is assuming economics is the only consideration. Certainly there could be other considerations.

  15. !wanda says:

    The Insight was an unfortunate comparison vehicle, because Honda has stopped making it, so the prices for it may not decrease like a normal car. Actually, I’ve been told that around here (San Francisco) used Priuses are barely depreciating in value because so many people want one. I’m not sure that an online site can capture the local price variations.

    “Plus, you now have the redundancy of another vehicle that will likely be able to seat your whole family, so if one breaks down, you’re not hoping for a loaner or renting a car.” No: the Insight is definitely a two-seater, and a small one at that (my friend has one). The reason why it gets such ridiculously good gas mileage compared to, say, the Prius is because it is a small, light car. Julia should go to Craigslist, find some actual prices for a used car like a Prius or a Civic hybrid, and run the numbers again. Gas in SoCal is like $4/gallon now, so it will probably still be in their favor to get a fuel-efficient car.

  16. E.T.Cook says:

    Maybe I am wrong, but 1800 miles seems far too excessive to use as a comparison point.

    Did we really need a simple dollar article to tell us that the more you drive, the more it makes sense to get a hybrid? Also, from what I have seen, the disparity between the EPA rate and actual rate on hybrids far exceeds non-hybrids. Hybrids also get killed if you are driving faster than 60 mph, their MPG exponentially decreasing at an astounding rate.

    Regardless however, maybe I am a bit frivolous at times, but even if I am saving $100-$150 in fuel, I would be spending so much time in my car, that I would have to consider why I am more comfortable in the non-hybrid.

    This almost seems like a mattress argument to me. You spend 1/3 of your life on your mattress, but yet people will still try to cut corners and get a garbage mattress. Having a very comfortable commuter car, especially if you are driving that long commute might mean the difference between starting your day out right, and not. And what price can you put on your sanity.

  17. Wendy says:

    Julia,

    I am in the same boat as you–driving around a gas guzzling Expedition. Like you I have 2 kids–ages 4 & 2. And I also have daughter #3 coming in a couple of weeks. After much talking we decided to delay purchasing a new car for a couple more years. Here is our reason. Maybe it will help you.

    My issue is that if we replace our car now we will still need a large vehicle to accommodate the stroller and 3 car seats (for the next year I am going to have 3 in car seats). If we buy a car now, we will still require a car that uses more gas than other vehicles. If we wait 3 years or so, we won’t need a stroller any longer and we won’t need as much seat room for car seats. Because of our decreasing space needs, in a few years we can get by with a large car or a cross-over SUV (and we will probably try to get a hybrid when we buy). In three years our car buying options will be much broader and will hopefully allow us to get a less expensive car than we would be required to buy now. Also, by keeping our paid for Expedition, we have lower insurance rates now than we would have with a new car. Just some more things for you to think about! Good luck with your decision.

  18. Julia says:

    Thanks Wendy! All great points, and I’m glad to know I’m not the only one taking the hit with an Expedition. ;)

  19. boomie says:

    I just traded my ’06 Ford Freestyle AWD which got 16mpg for an ’08 Ford Focus. Since I always pay cash for my cars, I got $13,000 for my Freestyle which I applied to the new ’08 Focus which after $1000 rebate and $500 off sticker only cost $16,000 so my out of pocket costs were only $3000. Focus has been getting between 34 to 40 mpg and I am paying close to $3.60 a gallon with $4 looming by the summer. I estimate with my driving I am saving $1000 a year on gas and will break even in 3 years or sooner (depending on driving and cost of gas).

    This was the smartest decision I could have made because realistically, I was going broke paying for the gas. I feel as if I have gotten my life back. Between gas and food, it was a difficult to make ends meet and I am far from a brokester.

    It should be all about fuel efficiency first, then safety, then costs of vehicle. The ’08 Focus is all about gas mileage, as it has digital displays on the dashboard constantly giving me my mpg and tire pressure info. Car also has 6 air bags (side curtains) anti-lock brakes and traction control and re-enforced side doors. I can plug in my iPod and get sirrus radio (plus iSync voice control). The car is euro styled and I love it! I have cruise control. The price was $17.5K, which wasn’t bad to start off with. Also, my insurance rates went down $300 a year. So, I am really looking at a break even point at a few months over 2 years. And lastly-the Focus has zero pollution emissions. Not only am I using less gas, but I am polluting the air less.

    Good luck.

  20. Becky@FamilyandFinances says:

    Everyone has had great points and comments! Keep them coming :)

    My husband and I will hopefully be having kids in a couple of years, and I’m already thinking about vehicle options. This information is great!

  21. Every time I turn on the TV there is an ad for a “bigger, more powerful” version of last year’s model car, truck, or SUV. Even Honda, who proudly touts itself as the world’s most fuel efficient automaker, is in on the act with their new Accord commercials. In these troubled times of global warming, high energy prices, and mounting debt, Americans’ still demand ever increasing power and automakers are more than happy to please.

    I used to feel that the gas mileage was just an excuse people would use to justify a new vehicle purchase, along the same lines as “my car is getting too expensive to repair”, and “i need to buy a car for the tax write off”.

    Unfortunately with $3-4 gas around the country it doesn’t take much of an improvement in efficiency to see a MAJOR difference in fuel costs and also conserve a little bit more energy for the future.

  22. Macinac says:

    Put safety first. If you are involved in an accident with the kids in the car, gas mileage will be the farthest thing from your mind. Every year new safety features are added: side air bags, antilock brakes, electronic stability control, etc. For example, my 2007 Montego lacks the ESC that the 2008 has.

    After you are satisfied about the relative safety factors of the vehicles in question, then consider overall cost. Remember that even though the price of gasoline is a moving target, it is only one out-of-pocket cost.

  23. wishtherewasaneasyanswer says:

    I am the one who sitched from the Escape (not Hybrid) to the Expedition. Comparing the Escape and the Expedition is like apples and oranges. An Escape does not seat three children in carseats, no way, I tried. Most Expedition owners need the space. You should have compared the Expedition to a Hybrid Minivan (if that exists).

  24. Julia says:

    With all due respect, Boomie, so long as I have children in my car, safety will all trump fuel efficiency. :)

  25. Bobby says:

    One thing to consider is that by buying new, you are taking a huge hit in new vehicle depreciation.

    I realize, it will not be as easy to get a hybrid unless you go new, but it might be worth it to also consider identifying newer used vehicles that won’t depreciate as drastically after your purchase. These should still dramatically improve your gas expenses.

  26. Anna says:

    Wendy, good points!
    Mom of three: ages 5, 3, and 1 and driving a minivan.

  27. It probably won’t be long until we see one major brand break away and start marketing with a focus on fuel economy.

    When gas really hits $4/gallon, you could run a really good ad campaign by putting hard numbers (MPG x $4/gallon x 20,000 miles/year x 1-6 years) in bold print next to numbers for your low-MPG competition. As Trent’s number breakdown shows, the savings can really start adding up.

  28. Jane says:

    If your family is comfortable in a Ford Taurus, I wouldn’t write off a Prius until you’ve sat in one and tried loading it up with your gear. I have a Prius and my husband drives a Ford Escape at work. The passenger room in the Prius is comparable to the Escape, and the Escape only gives extra cargo space if you load it up to the ceiling. The Prius backseat would easily fit 2 car seats. Toyota also makes a hybrid Camry, and you might have better luck finding a more gently used Camry since a used Prius will have a ton of miles on it here in SoCal.

  29. boomie says:

    The reason why we first got the AWD ’06 Ford Freestyle was for it’s safety rating. It is an extremely safe car. My DH at the time, and still to this day drives an ’05 Ford Focus, manual transmission, station wagon. As the price of gas increased, know which car all of us (kids included) piled into when we had to take a trip? You guessed it, DH’s Focus. Why? BECAUSE WE COULDN’T AFFORD THE $100+ GAS BILL for each road trip. The Freestyle used to sit and sit in the drive way more and more because we used it less and less. I bought the ’08 Focus, rather than a depreciated ’07 Focus because of all the safety improvements the newer model had. I got the best of both worlds.
    What’s the point of having a safe car if it is too expensive to use? That’s was my problem. DH kept telling me the Freestyle was the safest car but we were always using his Focus.
    You have to work out the numbers for your own family and your usage. We drive a lot. And my kids are grown up now.
    Good luck, still.

  30. I wiil be in the market for a new car in a about two years. My goal is to pay cash for it because I just hate payments. One of the things I will probably be the biggest selling point for me will be fuel efficiency. With the price of oil not dropping anytime in the future, I just don’t see any other choice. As always, we can use simple ways to save on gasoline but it will only help you to a certain point.

  31. ZerCool says:

    Ah, fuel efficiency … where does one draw the line?

    I wrestled with the same question about a year ago when I changed vehicles. I had been driving an ’04 Honda Accord 4-cylinder, and it wasn’t a bad car. Large enough, comfortable for a few people to travel in, decent economy (24-25mpg average, 28-30 on the highway)… but it really didn’t fit my lifestyle. I work in what they call “essential services”, and not being at work because of weather is not an option. I spend a lot of time outdoors – hunting, fishing, and camping. I shopped around a lot and finally ended up with an ’07 Nissan Frontier Crew Cab.

    I took a heck of a hit in the gas tank (16-17mpg average, 20-22 highway), but the freedom and ability to do anything I need to has more than made up for it. When kids arrive, it’s got a real back seat. It’s got 4wd and significant ground clearance, so weather isn’t an issue anymore. I increased my car payment by 50%, my gas costs by about as much … and I couldn’t be happier. I SMILE when I get in my truck.

    On the flip side, my fiancee recently got a newer car, and we decided on an ’01 Honda Civic… it’s just fine for two of us to travel in, and gets in the 40-42mpg range on highway trips.

    For errands around town, we take the Civic whenever we can. When we travel, we take the Civic. When we go camping, we take the truck. Trip to Home Depot? Truck. Hauling a trailer full of firewood? Duh.

    It’s tough to balance the needs of a lifestyle against the fuel costs of vehicles. I briefly considered a 4-cylinder pickup, but found that they were anemic, almost as bad on fuel, and almost impossible to find in 4wd – let alone a crew cab.

    The bottom line: figure out what you really NEED in a vehicle, factor in what you WANT in a vehicle, and look closely at what you can AFFORD in a vehicle. Increasing a payment by 50% to get a vehicle may not be financially prudent – arguably, it wasn’t for me, either – so look at vehicles that are in the used lots, two to four years old. Lease turn-ins are a great option for a lot of buyers.

  32. Eric says:

    Don’t forget to take the federal tax credit for buying a hybrid car into account. If you buy anything other than a new Toyota, you’ll get a tax credit (not deduction) against your tax bill for the year. Hondas are already starting to phase out, but Ford, GM, and other American brands haven’t begun to hit the phase-out-limit yet.

  33. Great Analysis Trent. We just went through a similar experience where we considered purchasing a new or newer hybrid or very fuel efficient vehicle instead of a regular base model car. In the end the savings didn’t lend itself for us to extend that far beyond our budget, but this is not always the case depending on your situation. I am glad we ran the numbers and like your quick and easy example here. Great blog!

  34. jtimberman says:

    Ugh.

    “Blue Book” is a *dealer* benchmark for pricing, not a consumer benchmark. Anyone who pays “blue book” prices from a private party, even on the private party amount is a fool and paid too much. Sorry if this is you[1], but its true.

    Edmunds.com has a much better market pricing tool with their True Market Value pricing, and their private party values more likely reflect reality.

    Further, no dealer is EVER going to pay anywhere near “blue book” pricing on a trade in. If they do, they’re going out of business soon.

    Finally, never ever EVER buy a brand new car! Buy a 2-3 year old used car from a private party and let them take the depreciation hit. Better yet, buy at a repo auction.

  35. T.Brown says:

    We were in a similar position, at least as far as having a gas-guzzling SUV and running the numbers to see whether a Prius made financial sense. We agreed that we did eventually want to sell the SUV; we just weren’t sure when. Once we looked at the depreciation curve for the SUV and the fuel savings for the Prius, it turned out that we would be losing money by not making the switch sooner versus later.

    It’s true, there is less cargo capacity. However, it will easily hold two car seats and, depending on the size of your strollers, a stroller or two plus diapers, towels and so forth. I can’t carry 4×8′ sheets of plywood in it, but those occasions don’t happen very often anyhow.

    We made the switch a year ago and haven’t looked back. We’ve saved a ton of money on fuel alone, plus the car is loaded with features that make it just plain cool to drive.

  36. Jon says:

    Maybe Trent should write an article describing in detail how to work a calculator.

  37. Mike says:

    Three other competing factors to throw in when talking about the 5-6 year financial outlook of a car purchase.

    First, you’ve got to factor the increase in gas prices in that time frame – for each price hike, a fuel efficient vehicle saves you more, meaning it could make better financial sense even sooner, and it is entirely feasible that gas prices will double in 5 years.

    For hybrids in particular, however, they may need a battery pack replacement in the 6-10 year timeframe, which will be $5000+ for most models (this cost is borne by the owner either directly to a dealership servicing or indirectly through decreased resale value).

    Third factor is the existence of subsidies for fuel efficient vehicles and taxes on gas guzzlers that will only become stronger over the next few years, particularly in California. While it’s difficult to predict exactly how this will effect cost of ownership, you can be sure it will.

    Using today’s figures provide a good baseline, but projecting trends over the next few years may give you a stronger push.

  38. My accord is getting 28 mpg with 60% highway 40% city driving. The trunk and backseat are more than large enough for a 4 person family. The Ford Expedition only serves a purpose if you’ve got 4 kids and need to tow a boat.

    It’s not the cool way out, but trade in the Expedition for a used van in good condition. If vans are too uncool, get a wagon. Subaru makes plenty of good wagons that get decent mileage.

    Hybrids are not worth it right now. Wait until the next generation that will use lithium ion batteries.

  39. Julia says:

    Every comment so far has been very helpful and insightful, with the exception of Jon @10:02. Are you suggesting I can’t work a calculator? Maybe while he is at it Trent can write an article on manners, too.

  40. Julia says:

    The Weakonomist– Subarus are actually one of my favorite wagons. They are on my list of cars to consider. :)

  41. tambo says:

    We got an ’08 Prius as our primary vehicle mostly because my husband has a 90 mile commute to work. It’s been averaging about 44mpg on the interstate, just under 50mpg in town, MUCH better than the 13-18mpg of our old Explorer. While it’s obviously not as big as the Explorer, it’s very roomy for seating 4 adults and there’s quite a lot of storage space in back. Gas prices here are around $3.30 a gallon and they’re almost sure to break $4. I’d rather put the money into a car payment and have something to show for it than simply dumping it down the gas tank.

    Fwiw, we kept our Explorer as a secondary vehicle but have only driven it once since we got the Prius.

  42. Ben says:

    Surprised this hasn’t been suggested earlier… but why not sell the SUV and buy a more efficient used vehicle that costs same or less? I can’t imagine them not being able to fit a family of four in most any full size 4-door sedan. Pick up a 5 year old Accord and you can cut gas expense in half and possibly walk away with money in your pocket.

    You don’t NEED a hybrid to save money on gas, and you don’t NEED a massive SUV to haul around 2 kids.

    My 2 cents.

  43. Julia says:

    Tambo–interesting perspective re: money towards car v money towards gas. Something to consider. Thank you!

    Ben–that is an option as well. We are considering used vehicles. My question about the hybrid is mainly because I am in the early research phase and at this moment know little about them, other than they are very popular in my area (so-Cal). I don’t know if you have children, or not, but the issue is not so much fitting the family in the car. It’s fitting the “stuff” the family comes with in the car. We have a double stroller, which takes up a good deal of room. Luckily, I don’t think we will need it much longer.

    Thanks so much for your input. :)

  44. EdTheRed says:

    The break-even point will occur earlier because gas prices will continue to rise. In the Spring of 2000 gas was about a buck a gallon. Now it’s $3.50. If the trend continues we’ll be seeing $8/gallon gas in a few years.

  45. Ben says:

    No kids for me yet, but it’s not too far off. My wife just got a low mileage 2001 Accord for $8500, and has been averaging ~33 mpg lately. Being able to fit in the trunk will have to be a boundary condition for any kid “stuff” we acquire… I hope ;).

    Good luck!

  46. Elizabeth says:

    Trent –

    Interesting analysis but you left out a few very important factors when looking at the possiblity of keeping the Expedition and buying a third car — insurance and maintenance. A car, even if only used for 1% of the driving will still cost 100% of the insurance. And while it might not need as much maintenance as if it were driven every day, it will still incur maintenance costs.

    A word about Subarus — I am a huge fan of Subarus and when we finally get rid of my Toyota Sequoia I’m definitely going back to an Outback wagon. Still, the fact is that Subarus are not terribly fuel efficient. They are heavy and, because they are all-wheel drive all of the time, their MPGs can’t compare to similarly sized/classed 2-wheel drive vehicles.

    My daughter and I have a running conversation over which would be the smarter purchase — a Toyota Corolla or a Subaru Impreza sedan. She likes both and often argues that the Toyota gets better gas mileage. She’s right but while I did get 150,000 miles out of my Corolla, we got over 250,000 miles out of our Subaru Legacy wagon — and it was still running fine when we sold it.

    The interior held up extremely well. As I told my daughter, I love having a car lasts 13 years but I don’t want to drive around in a car that feels all worn out. The interior and exterior needs to last as long as the engine does. In my humble opinion, Subaru has the corner on that market. I have no trouble imagining myself never owning anything other than a Subaru for the rest of my life.

  47. Brad Twyford says:

    I was going to go to a Hyundai dealership to pick up an 2007 Elantra because they have great gas mileage.

    Did some Googling and found Skip the Dealership (www.skipthedealership.com). Thought it was an awesome idea. Saved a ton of money in the process too.

    Don’t buy cars retail, folks.

  48. Julia says:

    Elizabeth–that’s how I feel about Volkswagens. I know, I know. People complain about the reliability. It’s true, VWs have been hit and miss in that area but I had nothing but great experiences with mine. I’m holding out hope because I hear the Jetta SportWagen diesel (50 mpg advertised, most likely closer to 40 or so IRL) will be for sale in so-Cal this August.

  49. Lisa says:

    Another aspect to all this is the positive effects of owning a more fuel efficient vehicle on the environment.

  50. Randy says:

    I see three scenarios: (1) Gasoline is available (no shortage), you have a low mpg serviceable vehicle. Run the numbers – it’s probably cheaper to keep the current vehicle until it’s mechanically unreliable. (2) Gasoline is available, you need a new vehicle (your old one is undependable). Again, run the numbers before purchasing a different vehicle (new or used). Consider sacrificing a little room for fuel economy. (3) We have a gasoline shortage (embargo, etc). You will wish you had a high mpg vehicle!
    Seriously, with the green, save-the-environment, global-warming cachet, I doubt trading for a higher mpg vehicle when your current one is serviceable will ever make sense. Manufacturers charge for this cachet – many conventional compact cars have historically been sold at/ below manufacturer’s costs to help meet CAFE standards.
    Forget hydrogen power, alternative fuel vehicles for the next decade, at least. Plug-in gasoline/ electrical hybrids are the only forseeable alternative to conventional gasoline/ diesel vehicles in the next decade.

  51. Jon says:

    @Julie
    “Every comment so far has been very helpful and insightful, with the exception of Jon @10:02. Are you suggesting I can’t work a calculator? Maybe while he is at it Trent can write an article on manners, too.”

    I don’t know. You tell me. That’s about what this article boils down to. I think Trent did write an article about manners. I think it came shortly after he told us how to shower and brush our teeth.

  52. A.M.B. A. says:

    I agree with Ben- comment #42. My children are 13 months apart in age. We had and still have a 4 door sedan (Tauras). There was and is room for everything – double-stroller included. We had absolutely no need or desire for a SUV, minivan, etc.

  53. Andrew says:

    One potential problem for this family is that they are unlikely to get anything close to Blue Book value for their Expedition. Until recently I sold cars for a living and part of my job was evaluating values for trade-in vehicles. All large SUV’s have almost no resale value these days, which in turn effects the prices dealers are willing to pay to take them in trade. Blue Book value are not to be taken as gospel.

  54. John D says:

    This whole string of comments sent me searching for an old issue of Mother Earth News. It was published. It was published in the middle of the second gas crisis of the late 70′s, early 80′s.

    They had an article doing one of the first cost analysis of buying an old large sedan, an 8 year old Pontiac Bonneville I believe, versus a new Volkswagen Rabbit, (Japanese cars had not become a car of choice at that time for many in the US). I wish I could have found that issue to quote the numbers.

    Because of depressed market value lowering the acquisition price, cost of insuring an older car, and other factors, the Pontiac was less expensive to own and operate even after calculating maintenance and higher fuel expenses.

    This puts a nod in favor of keeping the Expedition. In a few months the monthly expense will be just the gas, maintenance, and insurance.

    Another factor I saw when I started selling cars in the 1970′s was how people often traded in comfortable large cars to get the high mileage cars. Many complained how uncomfortable these cars were. The seats were less well padded and the suspensions were working with less mass and only increased handling ability at the cost of ride comfort.

    Most of these people replaced the car sooner in the trade cycle than they normally followed. That was when we also saw many people start financing negative equity on the new car loan. So Julia may want to reconsider a knee-jerk reaction purchase to acquire a car that satisfies only a fuel economy need.

    Let’s face another factor about small cars. They are small. In collision dynamics, they lose unless they hit another car of their size. My family rides in a minivan. I want them sitting above the points of impact and the transfer of forces. My wife is a good driver, but kids are distracting and I know they have a better chance of surviving an accident in a larger vehicle.

    My vote would be to stay in the Expedition if considering the family budget. Normal driving is nationally averaged at 1500 miles per month, so 1800 in a large city is not out of the norm. I would not replace a vehicle before you are prepared to replace it in your normal cycle, unless some unforeseen event requires it to be replaced. Higher gas prices have been a factor in our lives for many years now and it seems for some time to come.

    Randy has it nailed. Although, I would say we don’t know what the next form of power our vehicles will be using, but it will be a market driven decision. Supply and demand dictate prices as well, trading the Expedition now would be selling it in a down market for the vehicle. Keep it very clean, keep it well maintained and you will realize the best value when it does come time to put it on the market.

  55. anon. says:

    I’m going to have to say the obvious here: If you’re driving even close to 1800 miles a month, you need to start driving less. It doesn’t matter where you live — I live in Atlanta where cars are king, no public transit, nothing walkable, drive to work everyday, drive kids to daycare, etc., and drive about 700 miles a month. (I’ve started limiting myself to 140 miles per week (20 miles/day). If I want to go somewhere and I’m over the average, I don’t go.)

    If you’re driving 1800 miles/month, you need to seriously think about the decisions you’re making, and think about whether that means should change jobs, move, put the kids in different schools, etc. You’ll be happier and healthier. Just think, assuming you’re spending all of those 1800 miles going 60 miles/hour (which you’re not), you’re spending 30 hours a month in the car. That’s almost an entire work week.

  56. Great article… I’m all for high MPG vehicles!

  57. Mary says:

    I was in a very similar situation almost 2 years ago. Driving a Ford Excursion getting 10 -12 mpg (V10). I needed this vehicle when we lived in AK, but wen we moved back to MO I didn’t need the gas bill any more! I had a $450 payment and was putting over $400 in gas every month and not going as much as we would’ve liked. After putting pen to paper for us, we bought a Toyota Prius. I consistantly get 48 mpg on the hwy. I can make the payment on what I was spending on gas before, so I feel so smart! I also have 2 boys, 6 and 3 and we have never had any problem getting all of our stuff inside as they are larger than they look. I have also had 3 carseats in the back, it’s a stretch but can be done. Don’t count out the Prius because you have a young family!
    P.S. My kids say they have more “foot room” than they have in my husbands double cab pickup!

  58. Sharon says:

    Before you turn in a car for a “higher-milage” car, stop and take a good, long look at your driving habits. Do you floor it as soon as the light turns green? Sit on the tail of the car in front of you until the last possible minute when you see you HAVE to slam on your brakes because the light in front is red?

    Do you take a look at the series of traffic lights in front of you and ease off the gas when you see it is yellow or red, so you don’t have to stop, because by the time you get there it is green again?

    Are you weaving in and out of traffic, zooming up and braking hard and jerking out into the next lane, and then zooming up again?

    I really hope not, especially with children in the car, and this isn’t necessarily directed at Julie, but at everyone. The vast majority of drivers I see are guilty of these and more, and people are robbing themselves of decent milage when they drive like idiots, as well as endangering themselves and others.

    There are very significant safety issues with hybrids, particularly in collisions. High voltage exposures can be fatal to rescue personnel, and special training is needed for them to extract victims. I am concerned, as a safety professional, about what exposures my family could be risking in a collision when trying to escape from a seriously damaged vehicle.

    The costs of replacing the batteries is nothing to be sneezd at, either. $5000 is a large chunk of change, and I would think that in many cases it will erase any gasoline savings. I have never been an early adopter of new technology, and have saved myself a fortune because of that. I am also concerned about the other potential safety complications of hybrids, such as what might happen if batteries break open in a collision. These are things that I prefer to let other people discover and solve before I buy into it!

  59. Julia says:

    Anon @ #51:

    Now it’s my turn to state the obvious: I don’t put 1800 miles/month on my car. Those are Trent’s numbers. I said I spent $400/month on gas, he assumed my mileage and what I paid to fill my truck. As I mentioned in the comments, I pay closer to $4.00/gallon on gas. I also do a lot of city driving, which puts me below Trent’s 16mpg average. My average is closer to yours.

    Sharon–You’re talking about “mad moms in minivans” and I’m happy to say I am not one of them. I actually don’t go above 65, even on the freeway. I hate it when people stop and go, and actually have a problem with motion sickness so I don’t do any of the wild driving you’re talking about. But, you are right–most of the drivers out there are crazy. :)

    As far as the other safety hazards you mentioned, I wasn’t aware that special training was required to extract people from accidents in hybrid vehicles. Additionally, what type of force is required to crack the batteries, and could one even survive the requisite force for such an impact?

  60. George says:

    I agree that keeping the Expedition for a few more years might be something to consider. There is a lot of relief by not having a car payment. What if you lost your job the next day? We are in a recession at the moment. I just don’t think a car qualifies as “good debt.” I think saving for the hybrid makes sense but picking up a car payment for another 5 to 6 years is probably not a good idea. However, is you were able to get a hybrid a great price, then that is something to consider. Unfortunately the Hybrids are kind of expensive.
    Civic Hybrid Honda’s small gas-electric hybrid sedan $22,600 – $24,350
    2007 Honda Accord Hybrid – Accord Hybrid Honda’s midsize hybrid sedan $31,090 – $33,090

  61. brent says:

    ooo-rrrr….

    spend a couple of grand on an absolute kick-arse bike and save the planet, get fit, and have a great time getting to work.

    move closer to your work, using the hundreds and hundreds of dollars a month you’re not spending on commuting to buy a big fancy house.

  62. Big Mike says:

    I really enjoy seeing everyone’s comments here. I too have worked the numbers several times and cannot make them work when it comes to Hybrids. I have a Dodge Durango with low mileage and in excellent shape. Of course it gets crappy gas mileage. So I purchased a used Honda Accord wagon. IT gets roughly 28 Mpg highway. It now has about a 183K Miles on it. Has been great cheap and versatile vehicle. I can put down the seats and hall virtually anything. Both of these vehicles are long since paid for. I was getting my car serviced @ the Honda Dealer a few months ago and thought about unloading both vehicles and getting a new CRV. I found out they would give me roughly $3500 for the Durango and I figured I could get about the same for the Accord wagon selling it myself. So, I would be basically be looking at a $20,000 difference to make the change. I decided that I really did not want a $500 a month car payment. Since my Durango is basically worthless in the eyes of the rest of the world, I decided to keep it and only drive it in bad weather or when I really need to haul something that would not fit in my Accord wagon. This gives me some over my spending. My eventual goal would be to move closer to my work and then ride public transit, bicycle or motorcycle (50 MPG). As far as vehicles go I am not impressed with the lack of quality in “American” cars and the dealerships are lousy on service in this area as well. The only decent place that I have found for service at a dealership is Honda. Otherwise, I would need to drive 50+ miles and take vacation to get any other import worked on. I would consider a Toyota, but the dealer in this area is lousy on price and service. These are factors that I am not sure
    anyone else put much priority on. Consumer Reports can give you statistics on reliability, which is good, but knowing that you will not get ripped off at the dealer on non warranty repairs is priceless information to me.

  63. Julia says:

    Let’s face another factor about small cars. They are small. In collision dynamics, they lose unless they hit another car of their size. My family rides in a minivan. I want them sitting above the points of impact and the transfer of forces. My wife is a good driver, but kids are distracting and I know they have a better chance of surviving an accident in a larger vehicle.

    Sorry, somehow I missed this comment! :) You bring up a great point, and one that has weighed heavily on my mind. When we went to the CHP to have our car seat installation verified, we spoke with the officer about small cars and what a PIA SUVs were. He said that as awful as they are, he would never put his family in anything else until the big car phase was over. His point was pretty much yours, that your best bet is to be level or above the point of impact.

    George and John D: both interesting points. I have driving smaller cars, but they were luxury cars so comfort wasn’t an issue. I’ve been a passenger in an inexpensive compact car (my husband’s old car, for example) and I can see where it could be an issue if I was in it for long periods of time.

    I also like the idea of not having a car payment. I know Trent lumps the cost of gas in with a payment, but I tend I see it differently. If I have just gas, I have only a variable expense to consider that if worse came to worst, I could control by not driving except for necessities. On the other hand, if we had a major financial hiccup with a new car, I could only control the variable portion of my payment (which would now be quite small due to efficiency), and not the fixed note payment due each month.

  64. Sharon says:

    While you are getting that “kick-arse bike,” be sure to also have the following: a really, really good helmet, an iron-clad disability insurance policy with enough coverage to keep you and your family in reasonable style for the rest of your life, a top-of-the-line health insurance policy, a staff of lawyers to force your heaalth insurer to pay the claims when you are injured, and enough life insurance to pay for your funeral. You WILL be putting yourself into great danger when riding with traffic, and sooner or later your number WILL be up. If you don’t have all of the above, I really don’t think you can afford to ride a bike to “save money.”

  65. Julia says:

    Brent@61

    Maybe I’ll skip the bike and get a rickshaw, that way I can strap my boys in the back and have them hold all the groceries while I peddle us home. ;)

  66. Rob says:

    Where’s the servicing numbers Trent?

    My local mechanic doesn’t have the fancy equipment to deal with some hybrids – but on an older car – he’s probably half the price for repairs/servicing/etc…

    I’m just not convinced that Hybrids are the answer from a financial perspective yet.. (I personally drive a 4 cylinder 13 year old car so I’m getting better than 16mpg, and don’t have to work these numbers for myself…)

  67. yvie says:

    Yes, Sharon,

    All of us bicycle commuters are soooo stupid to cycle to work. We all ride in busy traffic to get there and risk life and limb every day because we can’t see the dangers in our lifestyle.

    Some cities are bike friendly. I bike to work mainly on bike paths. Moved close to work to avoid using my car. My family still uses one car, just not two.

    Bicycle commuting, if you can do it, is a great way to save on gas. The more people who do it the more our cities might cough up some money to make it safer.

    Yvie

  68. Rob in Madrid says:

    It’s a bit of a myth that small cars aren’t safe. Small American cars are still bigger than their European counterparts (by several feet). I remember reading that Honda has been trying to put that myth to bed for a while. Also the small car of today isn’t the small car you remember of yesteryear.

    I haven’t looked at the numbers but I’d be interested comparing safety in a small Volvo vs a big American truck.

    Of course if you hit by a semi truck head on at 70mph it won’t matter much what your driving.

  69. Rob in Madrid says:

    It’s also the great American tradition of upsizing everything. I mean who in there right mind would raise 5 kids in a 1200 sq foot house like our parents did. They’d be insane, I mean with two kids the avearge 5000 sqft home is barely big enough. Cars are no different. Everyone thinks they need a hummer to haul the groceries.

  70. Rob in Madrid says:

    Also just a note in spite of what everyone says gas is only going one way and that’s up. Predictions are that oil will hit $160 a barrel this year (which I tend to believe for reason that are too long winded to get into here) Which should put us up into 6-7 dollar a gallon range. When that happens we’ll all be joking about when gas ONLY cost $4 a gallon.

  71. Rob in Madrid says:

    When riding a bike(and I’d include a motorcycle) get a bight reflective vest, my wife bikes to work everyday and you can see the vest a mile off. It makes a big difference

  72. Jeremy says:

    I did not get a chance to read all the posts, so sorry if i’m repeating, but I liked this post. My suggestion as I am also in the market for a “newer” car is to go with something like a Subaru Outback or a Volvo Wagon. these are very nice and safe cars, will have as much room or more than an escape for strollers, etc. and you can usually get an ’03-’04 or so model for about 13K (if you shop around) the same as is owed on the Ford. these cars get about 27 mpg highway, and although this is less than the hybrid, it is still 2x better than the current vehicle and is not adding any extra (15K!!!) debt. plus you are going to pay a premium for hybrid technology, which i am glad there are people out there paying that premium right now, i just dont want to be one of them, thats why I read The Simple Dollar.

  73. Steve says:

    How about a comparison of a new hybrid vs. a used, medium mileage car? E.g. a new Prius vs. a 3-year-old Civic?

  74. michael says:

    Sounds like Sharon lives (like me!) in Vegas, or some similar bicycle-unfriendly areas. I traveled to Seattle last year and now have bike-envy — what a fantastic place to ride a bicycle!

    I’d also point out to Sharon that, if safety is really your primary concern, you shouldn’t be driving at all.

  75. Dave says:

    Well, down at comment #75, nobody will probably read this, but Trent, your numbers are wrong. You didn’t weight the averages. Simply because the Expedition is used 30% of the time doesn’t mean it uses 30% of the gas, it uses quite a bit more than that (63%, actually).

  76. chris says:

    just a quick note, on npr the other day they had an entire segment about how nobody can find hybrid suvs at dealers right now.

    Apparently there’s a large supply problem with the hybrid batteries and long wait lists at dealers who maybe get one car every few months, if they’re big dealers.

    The funny thing is all the car companies continue to massively promote cars that they can’t really sell at the moment because advertising green gives them a huge pr boost.

  77. Stephanie says:

    Just want to say that I agree you should ditch the Expedition, especially if you live in SoCal. I don’t drive a hybrid but I do drive one of those mini wagons that gets good mpg. Out here in Texas (DFW) it is scary when you drive a small car against all the SUV and full-size truck owners. I remember the days when I had a Miata and trucks would get right on my tail and then cut me off because they think it is funny to do that. It was one of the reasons I got the wagon. I don’t have that problem when I rent my sub-compacts and drive around SoCal though.
    Anyways…
    Someday I will have kids and I will have to make decisions of money vs. setting examples for my children. I would want to set the example that over consumption isn’t okay whether it is food, shopping, gas, water or whatever. To me an SUV or full-size pickup truck is just over consumption if it is only for casual use. If we picked cars that didn’t pollute as much then maybe the air won’t be so bad for your great-grandchildren someday. There are certain things that are priceless and quality air is one of them.

  78. Bill says:

    The diesel Jetta Sportwagen would be a great choice, if you like VWs.

    And if you get to a dealer before they sellout. :)

  79. leigh says:

    “For hybrids in particular, however, they may need a battery pack replacement in the 6-10 year timeframe, which will be $5000+ for most models (this cost is borne by the owner either directly to a dealership servicing or indirectly through decreased resale value).”

    come on, you’ve *got* to be kidding me. the warranty alone covers the batteries for 10 years/100k miles, 15 years 150k in california. i’m so tired of hearing this “fact” floating around. last cost i got on a hybrid battery was $2800 from toyota.

    i have not read every single comment, but one point i did not see considered is the interest that you pay taking out another loan. it often adds up to a real chunk of cash that should be considered carefully before getting into a new car.

  80. Helen says:

    Hi Julia, we have always been very happy with Volkswagens. Our Passat sedan is actually trending to better gas mileage than the sticker indicates. I do keep fuel efficiency driving tips in mind, and I think the EPA has a list on their site if you’re interested. We wished we could have held out for the diesel wagon, that looks great! Banking the car payments you would have paid once they are finished on the Expedition and waiting another year is an option, which would give you a down payment without much pain.

    Don’t be put off by a sedan vs. a giant truck. Two Britax seats fit very comfortably in our backseat. My friend can fit two Britax seats in her Prius. Also, I can fit a Bugaboo, a smaller stroller, and groceries in the trunk without any cramming. Don’t write it off until you go to a lot and put your usual stuff into the cars you are considering. And if you aren’t having more kids, you’ll be gear-free in another year or two, so maybe waiting and saving the down payment up does make sense if you find the fit is just too tight for you. Even a mini van or something like a Honda CRV would do better than the Expedition, no?

    Another thought, which hardly anyone has touched on – do you feel there will be a psychological benefit for you in driving the Hybrid? That’s worth factoring in, if making an conscious effort to be greener (while continuing to mitigate how much you drive and batching errands in certain areas on different days) while make you feel like you are doing more than you were. In my area, SUV owners are typically the butt of jokes, so there may be social pressure in your area.

    Trent – I felt like you may have missed the mark with this one. Adding a third vehicle just sounded strange to me. Even a small payment plus insurance, taxes, title will easily eclipse the fuel savings.

  81. Jarick says:

    Ran more numbers using new EPA guidelines:

    2004 Expedition avg MPG is 14, monthly fuel is $400, average cost over 5 years is $450.

    2007 Prius avg MPG is 46, monthly fuel is $122, average cost over 5 years is $622.

    2006 Civic avg MPG is 32, monthly fuel is $175, average cost over 5 years is $542.

    Obviously this goes down if your fuel costs are split over two vehicles, and it doesn’t take into consideration equity or repairs.

    But the numbers say the most cost effective way is to keep the old car rather than get a new one. Perhaps consider paying it off, then setting aside a “virtual” car payment, and getting a slightly used fuel efficient car, but not necessarily an expensive hybrid?

  82. Joel says:

    I’ve often wondered about this, so thanks for getting my gears turning! After reading some of the comments, I concluded that the real issue for most people is cash flow: we rightfully feel as though the rising cost of gasoline has really pinched our funds.

    So looking from a purely cash flow perspective, I compared two scenarios. In each one, we have the following constants:

    - we have $5,000 cash up front.
    - we drive 1,800 per month
    - gas costs $3.50/gal

    Scenario 1) Pay $5,000 cash for a used car that gets 18MPG (like my 98 GMC Jimmy).

    Scenario 2) Finance a new car that gets 30MPG – don’t care whether it is hybrid or not or what type of vehicle. The purchase price is $25,000. We use our $5,000 as a downpayment and finance $20,000 at 7% = $425/mo [http://www.cars.com/go/advice/financing/calc/loanCalc.jsp?mode=full]

    *Scenario 2A) Same as 2, but we get 40MPG.

    Here is the break down I came up with over 5 years (so everything is extended by 60 months):

    Scenario: 1 2 2A
    Upfront cost: 5,000 5,000 5,000
    Payments: 0 25,500 25,500
    Gas: 21,000 12,600 9,450
    ————————–
    TOTAL OUTLAY: 26,000 43,100 39,950

    *CASH FLOW DIFFERENCE:
    In this case, buying a new car costs an additional $17,100 over 60 months (cuts to $13,950 in 2A).

    [*Before anyone cries foul, I know I did not include maintenance or insurance. Admittedly unscientific, but I'm considering it a wash. Old car = less insurance more maintenance, new car = more insurance less maintenance.]

    Let’s look at monthly cash flow:

    Scenario: 1 2 2A
    Payments: 0 425 425
    Gas: 350 210 158
    ————————–
    Monthly OUTLAY: 350 635 583

    Again, strictly looking at Cash Flow, buying an old car with worse mileage is less total outlay AND less monthly outlay.

    For those with a Balance Sheet perspective, you may point out that there will be residual value in the new vehicle while the old vehicle will be essentially worthless. This is not entirely correct, but let’s (generously) assume that the new car retains half it’s original value. It is now worth $12,750. Let’s also admit that no car is worth $0, so we’ll say the old car is worth $500.

    Scenario: 1 2 2A
    5-year diff: 0 -17,100 -13,950
    Residual Value: 500 12,750 12,750
    ————————–
    Balance Sheet: 500 -4,350 -1,200

    So from a balance sheet perspective, the only scenario that remains positive is the old car purchase.

    I’m sure there are plenty of faults, and I look forward to reading them, but let me head a few off at the pass. Pointing out the obvious, there are a lot of moving parts here that could affect this analysis that you could use to improve the situation.

    1) In the obvious category, the more gas you use, or the better MPG, or the higher gas prices go, the better the new car looks. The balance sheet break even occurs in this scenario at around 50MPG.

    2) You could get a used car with much better MPG than 18. There are always Hondas and Subarus in this price range that get 30+. If that is the kind of used car you get, I’m not sure there is ever a break even.

    So my conclusion is that unless the sustainable MPG is very high (50+) or the price of gas gets really outrageous, the disparity in MPG itself is not enough of an argument to justify a NEW hybrid.

    Please take this with a grain of salt and forgive the pun:

    Your Mileage May Vary.

  83. carmie says:

    I drive an ’07 Subaru wagon & have no problem fitting 2 carseats in it. Here in Colorado, I need the 4wd about half the time in the winter. 99% of my driving is city-style stop & go, but by avoiding quick accelerations and keeping my rpms below 2000, I manage to keep my average mpg around 24-25. My only regret with it was buying it new. I had an ’01 that was totaled in an accident and got a giant insurance settlement, but I wish I would have put the money into something better. Also, the backseat in the ’07 is much smaller than in the ’01.

    Julia, you don’t need 4wd in SoCal, though. Check out used wagons – my folks had a Taurus wagon forever and it did well. Or, I had a ’97 Ford minivan for a long time as well and it was very roomy. Mpg was around 23.

  84. Big Mike says:

    The reality is also that what ever you think the Expedition is worth, right now you can basically divide it in half. Nada book does not factor in the current gas price and the fact that there is virtually no demand for said vehicle at this time. Try unloading it at a dealership and they will basically give you nothing for it because they will most likely have to dispose of it at auction. Actually, if it is in good shape the parts are worth far more than the whole.

    As far as interest, I was including that in the car payment of $500.

    Sharon,

    Who needs to get a Kick Arse bike, when I already own 3. Have a buddy that owns a bike shop. Can you say Huge Discount!!!

    I do have insurance, a helmet, a job and a enough sense to ride on a bike path! Did I mention I am a DINC as well?

    I will not ride my motorcycle on the freeway/interstate either! Free wheelin’ back roads for me!

  85. Adrian says:

    i’m willing to pay extra in gas for a big fairly-safe old 1994 cadillac. no matter what Honda says, i’ll come out on top if (heaven forbid) i ever had a crash with a Civic. It won’t protect me at 70mph, you’re right, but the point is that it does make my family a LITTLE bit safer on the rode. The extra in gas is my insurance policy. Don’t kid yourselves…. as one poster wrote, gas mileage will be LAST in your mind if your precious little 2 year old daughter suffers a concussion in a crash (or much worse). To pay a little more each month for a tiny bit more safety in a crash makes sense to me. Maybe it doesn’t make sense to everyone.

  86. Sharon says:

    What is a DINC? Glad to hear that Big Mike has sense, anyhow. To add to the safety discussion, a larger older (or any age) car is sometimes safer than a much smaller car, but those new side airbags are really worthwhile, and the electronic stabilization feature is another good one. Higher vehicles will roll over easily, though.

    However, having just this past year or so graduated to two (2!) cars with dual front airbags and cup holders, I’ll look forward to the other innovations in about 10 more years. In the meantime, drive paranoid!

    One last point: if you buy a used car with airbags, insist that they be inspected. Scam artists are failing to replace deployed airbags, and if it were me, I wouldn’t buy a used airbag-equipped car that was in a collision where they deployed. It is really important to have a competent mechanic look the thing over before you fork over any money.

  87. Big Mike says:

    That big Caddy is great, but wait till it falls apart and the GM dealer puts the screws too you.

    DINC – Dual Income No Children!

  88. Nathan says:

    Has anyone figured how much money they are losing by spending that money on a car instead of investing that same money in something else? I know interest rates are terrible but that would still add up.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>