Will Buying a Fuel Efficient Car Really Save You Money?

[Gawain 0]

I drive a RAV4 with the V6. It doesn't get stellar mileage, but for the size/type of car and engine it's tip-top. Fast high-way cruising nets me low 20s in the MPG department. Upper-mid-20s when slower.

For those that don't care to calculate the cost per mile, or per trip (i.e. Gallons per 100 miles, etc), here is another tool for you to consider if you've been contemplating a new car.

In ROW 3, enter your vehicle information (get the specs from www.edumnds.com or www.kbb.com) in the "white" spaces.

The rest of the sheet will populate itself.

What the information means:

The measurements are based on calculated "Combined MPG" and the fuel cost is based on $3.90 per gallon of gasoline (regular grade, it's about $3.50 here in western Kentucky).

The "new" vehicle price is a general price, I didn't seek to find base MSRP, since no one ever pays that, it's almost always more.

The "Cash" column is cash you'd have to pay out to buy the new car outright, with your trade. If you're free and clear with a title now, financing a new vehicle for the sake of gas saving does not save you anything.

"Years Even" is the number of years it would take for the savings in fuel to actually save you money against the out of pocket pay out.

In my example, it would take about 4 years for a Prius to actually start saving me money, longer than it would take for a Civic Hybrid. Whereas, a Honda Fit or Toyota Yaris would realize an immediate savings.

The list of cars I just picked...no rhyme or reason. I also did not include any diesels since VW's diesel for the Jetta doesn't have an EPA estimate yet.

Bottom line, better planning of where, and when you drive with what you have invariably will net you better results than jumping the gun to buy a new car.

This sheet can easily be modified to reflect any used cars you may be considering as well. However, if you're groaning about a BMW lease you might have, at $400/month, you're better off trying to buy the car outright than replacing it (since they last forever and get great mileage for what they are).

I know it's not a hot topic right now, since speculation has been pushing the prices down lately, but when they go back up...

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[shropshire 0]

Max - great piece of work and something that I'll find usefull too. (I'll need to add a few columns for the diffeent Road Tax that will be payable for different cars)

Like you, I'm thinking of trading in my current car (Freelander Diesil) but have this nagging doubt that I'll actually wont save much money in the sort term, because even though the Skoda Octavia is more efficient, I'll loose money on the sale of mine and save a few pennies on fuel...

I guess that it's all about Total Cost of Ownership and looking towards the future costs of fuel....

Thinking Caps on......

Cheers,
Tony

(.)Y(.)
Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome

[Remster 30]

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The list of cars I just picked...no rhyme or reason. I also did not include any diesels since VW's diesel for the Jetta doesn't have an EPA estimate yet.

I started to get interested in them, so I email the dealer. Dont hold you breath.

a $17K basic Jetta will be $24K in a TDI. EPA milleage according to him is 41 MPG (dont know if thats combined, or hway).

I did a quick calculation, and for us, it would payback after 9 years at current gas prices when comparing the 2 Jettas.

Remster

[nanook 1]

I entered the stats of my guzzler that runs on hippie tears. Since it's paid off and it's trade in value is still more than some of the vehicles listed, I see a lot of red. I guess that means the savings will be immediate. But, given the very low demand for large trucks, despite mine is a King Ranch edition, I probably won't get a lot for it anyways.

that's a neat spreadsheet

_____________________________

"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[LongWayToFall 0]

I have heard that 50mpg is possible on the freeway at reasonable speeds. Also, you can find used diesels for quite cheap, under 10k no problem. The diesels should have a longer life expectancy as well.

[Remster 30]

Still. A $7k premium for their diesels is way too much IMO.

Remster

[shropshire 0]

Buying 2nd hand would reduce that and you wont be taking the first big hit on depreciation, either.

(.)Y(.)
Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome

[micduran 0]

I tow a 26" camper so I need my full-sized gas guzzling pickup truck.
I am a full time teleworker so my weekday driving is minimal. I think it all evens itself out.

Be patient with the faults of others; they have to be patient with yours.

[jtval 0]

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I did a quick calculation, and for us, it would payback after 9 years at current gas prices when comparing the 2 Jettas.

Don't get confused remi.
The current gas prices will only be TODAY's price for TODAY.

they'll go up tomorrow. in 9 years I would expect not only recouped my cost but have actually saved.


I have n't bought a more efficient car yet but I am very close to trading in...

When did Gas break the $3 mark? how quickly did it break the $4 mark after that?
It's still going up.

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[Beerlight 0]

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In my example, it would take about 4 years for a Prius to actually start saving me money, longer than it would take for a Civic Hybrid. Whereas, a Honda Fit or Toyota Yaris would realize an immediate savings.

For me, it's really not about saving "me" money.

It's about taking the money away from Big Oil. I would much rather spend money to stop "Big Oil". Does that make any sense? I think I might be fractured or sumthin, but's that is the way I think as of late.

I've switched to motorcycle and bicycle as primary mode of transportation this year. Bought a house 2 miles from work......my small part!!

[jcd11235 0]

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If you're free and clear with a title now, financing a new vehicle for the sake of gas saving does not save you anything.

Not necessarily true. It depends on the difference in mileage, number of miles driven per payment period, fuel price, difference in insurance rates and difference in maintenance costs.

Monthly_Cost = Number_of_miles * Price_of_Fuel / Miles_per_gallon + Monthly_Insurance_cost + Monthly_maintenance_cost + Monthly_car_payment

Monthly_Cost of present car minus Monthly_Cost of potential new car equals monthly savings.

It's quite possible to go from a vehicle one owns free and clear to financing a new vehicle and still recognize monthly savings. There was a time within the past two years that I was driving 3000 miles per month on a regular basis. I know people that drive more than that. If I had owned my worst mileage vehicle, which got ~8 mpg, at today's $4 per gallon gas, that would have cost me $1500 a month in fuel alone each month. Trading for a vehicle that gets 20 mpg would offer $900 per month in fuel savings. If the new vehicle got 30 mpg, the fuel savings would be $1100 per month. $900-$1100 per month will cover a car payment and increase in insurance (we'll ignore the likely maintenance savings), and still leave extra money in my pocket.

How does your spreadsheet handle increasing fuel costs, future trade in values, time value of money, changing maintenance costs, etc.?

It's true that people need to consider more than MPG's alone when considering a new vehicle to save money. Even my model above oversimplifies things a bit, since it doesn't examine any of the above information, all of which is important over the life of a vehicle or vehicle loan/lease.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[Gawain 0]

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If you're free and clear with a title now, financing a new vehicle for the sake of gas saving does not save you anything.

Not necessarily true. It depends on the difference in mileage, number of miles driven per payment period, fuel price, difference in insurance rates and difference in maintenance costs.

That's a given. If you end up financing a vehicle that costs you $300/month, and the savings in fuel costs isn't at least double that, then there's no near term gain.

Maintenance is ubiquitous. The only model where that factors in is BMW, which includes maintenance in new vehicle sales. But once that window closes, it's $100+ per oil change (every 10K mi).

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Monthly_Cost = Number_of_miles * Price_of_Fuel / Miles_per_gallon + Monthly_Insurance_cost + Monthly_maintenance_cost + Monthly_car_payment

The spreadsheet is easily modifiable to take that into account. The cars noted on the spreadsheet do not represent anything out of mainstream, nothing exotic, and certainly not difficult to insure - almost purely a reflection of the driver.

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How does your spreadsheet handle increasing fuel costs, future trade in values, time value of money, changing maintenance costs, etc.?

It doesn't. I was working on it to convince my wife that springing for a Prius was not a good idea purely based on the cost of fuel (as it is right now).

However, there are people that are driving perhaps a Ford Mustang GT, or a GMC Envoy or a Nissan Frontier, or larger vehicle, wondering if it's worth it to change out vehicles. This sheet, in a snapshot, gives someone a snapshot of the numbers.

It may prove to be a better idea to simply change driving habits.

Anyone with a basic understanding of MS Excel can easily adjust the formulas for someone driving 3000 miles per month (which isn't the median).

The point I brought up, is simply the tipping point to the additional items you mentioned. Many people are going all out to save money for gas, not even accounting that they may not see savings for years, before other expenses are seen (such as what you outlined).

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[jcd11235 0]

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Maintenance is ubiquitous.

All cars require maintenance, but maintenance costs are not the same for all cars. Do you really think replacing the tires (for example) on a Civic costs as much as replacing the tires on an Expedition? Generally speaking, all of the imported vehicles I've owned have required less maintenance/fewer repairs than the domestic vehicles I've owned. IIRC, AAA calculated that SUV's typically have higher maintenance costs than small cars. It wasn't by a trivial amount, either.

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The cars noted on the spreadsheet do not represent anything out of mainstream, nothing exotic, and certainly not difficult to insure - almost purely a reflection of the driver.

You might be surprised how much the price of insurance can vary among different models of mainstream vehicles.

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It doesn't. I was working on it to convince my wife that springing for a Prius was not a good idea purely based on the cost of fuel (as it is right now).

How can you know whether or not it's a good idea if you don't look at all of the important variables?

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It may prove to be a better idea to simply change driving habits.

Better driving habits can translate to increased fuel efficiency in any vehicle.

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The point I brought up, is simply the tipping point to the additional items you mentioned. Many people are going all out to save money for gas, not even accounting that they may not see savings for years, before other expenses are seen (such as what you outlined).

True. And I was pointing out that sometimes it's cheaper to take on a car payment in exchange for increased fuel economy and possibly increased reliability. Also, if one considers asset value, rather than simply monthly expenses, it might (or might not) be a better decision to change vehicles even if fuel savings are not substantial.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[Gawain 0]

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Maintenance is ubiquitous.

All cars require maintenance, but maintenance costs are not the same for all cars. Do you really think replacing the tires (for example) on a Civic costs as much as replacing the tires on an Expedition? Generally speaking, all of the imported vehicles I've owned have required less maintenance/fewer repairs than the domestic vehicles I've owned. IIRC, AAA calculated that SUV's typically have higher maintenance costs than small cars. It wasn't by a trivial amount, either.

Understood, but not everyone maintains their vehicle the same way. It's impossible to compile a truly accurate maintenance estimate. Some folks change their own oil. Others bring their vehicle to dealers only. Some guys are their own mechanics. Miles driven. Some buy tires at Tire Rack or retail. Ad infinitum.

Either way, maintenance on "new" cars is typically less costly if the vehicle doesn't suffer from unforeseen problems.

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You might be surprised how much the price of insurance can vary among different models of mainstream vehicles.

I've driven long enough to know that too. The educated buyer is going to figure this out. This is a variable that is also impossible to calculate in general, since insurance laws are regulated differently in each state, and sometimes differently by county.

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How can you know whether or not it's a good idea if you don't look at all of the important variables?

My wife's argument was financial only. I argued that it would not (not immediately) save any money. The savings in fuel was offset by the out of pocket cash we'd pay out to purchase the car (we're fortunate enough that we are able to, and I would insist upon doing that). She then reasoned that we could finance the small balance. Even at 4.5%, for 2 years, would be $260/mo. $178.00/mo at 36mo. The financial savings in fuel is more than offset by the cost of the vehicle (just to buy, never mind the other factors).

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True. And I was pointing out that sometimes it's cheaper to take on a car payment in exchange for increased fuel economy and possibly increased reliability.

That would have to be one hell of an upgrade. Cars are made well enough nowadays that the scenario you note is not that common. Any properly maintained vehicle is going to last more than 5 years.

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Also, if one considers asset value, rather than simply monthly expenses, it might (or might not) be a better decision to change vehicles even if fuel savings are not substantial.

Asset value is easy - it goes down, always.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[piratemike 0]

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I tow a 26" camper so I need my full-sized gas guzzling pickup truck.
I am a full time teleworker so my weekday driving is minimal. I think it all evens itself out.

Do you tow that thing all of the time?

I imagine that most of the time your driving that truck your not towing anything.

You could still spend a couple of grand on a used honda or toyota and save the environment, not to mention some money.

There is some girl in my office that uses that excuse for driving her sky killer.
She's towed a trailer once last year.

I need to tow something once in a while(about twice/year), I will normal rent something for that weekend when I do. Sometimes I can borrow something from a friend.

I'm just saying that you need to think about the logic of that excuse before you use it.

[piratemike 0]

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This sheet can easily be modified to reflect any used cars you may be considering as well. However, if you're groaning about a BMW lease you might have, at $400/month, you're better off trying to buy the car outright than replacing it (since they last forever and get great mileage for what they are).

I know it's not a hot topic right now, since speculation has been pushing the prices down lately, but when they go back up...

Thanks for the chart, it looks like it's good data.

And I think that your making the point that the way you pay for a car can drastically change how much you spend on it.

I've seen auto loans that make the customer pay twice as much for the car as it's worth. Paying for most of a car outright saves you gigantic amounts of money.

Also, buying a fuel efficient car is about more than saving money. It's also about environmental responsibility.

[jcd11235 0]

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It's impossible to compile a truly accurate maintenance estimate.

Like one can never save money by financing a more fuel efficient vehicle if the currently own a vehicle outright, right?

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My wife's argument was financial only.

As mine have been. I didn't mention anything about safety or cool factor.

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I argued that it would not (not immediately) save any money.

Nor am I saying that it would. However, your spreadsheet appears to show the break even point, when in fact it ignores too many financial variables to do that accurately with any meaningful precision.

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True. And I was pointing out that sometimes it's cheaper to take on a car payment in exchange for increased fuel economy and possibly increased reliability.

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That would have to be one hell of an upgrade. Cars are made well enough nowadays that the scenario you note is not that common. Any properly maintained vehicle is going to last more than 5 years.

Yes, but there is a wide variance of fuel economy among new vehicles, so it would not necessarily be much of an upgrade in vehicle as it is in fuel economy.

Asset value is easy - it goes down, always.

Generally, but not always true. Vehicles do not always lose value at the same rate, either, which should make a big difference in the a reasonable consideration of a vehicle switch.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[LongWayToFall 0]

What kind of truck do you have? You should consider a dodge cummins, they get good mileage (20ish) and can tow anything. I would say any turbodiesel, but the v-8s don't get quite as good mileage. I'm betting your v-8 gas truck gets 10-12mpg........