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Gas prices are high.  Consumers are buying fuel efficient vehicles to save money on gas.  But does it really pay to buy a new vehicle just for better gas mileage?

In part 1 I told you how to calculate your monthly gas bill.  With that information we can figure out if it pays to buy a new vehicle.

I spend $75 ($71 rounded up) on gas per month.  This includes only my daily commute.  Since most of the places I have to go our on my route, I don't make many additional trips.

My vehicle gets 12 miles per gallon. I drive about 2,860 miles per year.

Buying a New Vehicle for Fuel Economy Doesn't Make Sense

I spend more on my cell phone bill then I do on gas for my commute.  It would be pure insanity to trade in a vehicle and assume the costs of a new one (sales tax, dealer profit, etc) just to save on gas.

What If the Cost of Gasoline Doubles?

Let's double either the gas price or the miles driven.  That puts me at $150 per month for gasoline.  Is a new vehicle worth it at that point?

No.  I purchased a new vehicle I would have to pay excise (sales) tax and get it titled (licensed).  Excise tax in this state is 3%. If I spent $10,000 it would cost me $300, $20,000, $600.  You get the point.  So it would require 2 months of gas just to pay the tax on the vehicle.  What about the $10,000 to $20,000 (or higher) I would have to pay for the vehicle itself?

That just doesn't make sense.  If you really want to save money, drop your cable TV subscription or cell phone service.  Stop eating out as much.  These things are optional.

When Does a New Vehicle Make Sense?

If you're buying a new(er) vehicle anyway, then a more fuel efficient option is probably wise. However, with higher gas prices, some formally expensive SUV type vehicles are coming down in price.

If you drive long distances and your gas bill is very high, you may want to consider a more fuel efficient vehicle.  However for the majority of drivers, it just isn't worth it…yet.  Gas prices have started to creep down again.

Let's say you drive 10,000 miles per year.  At $3.75/gallon the difference between a 12 mpg and 20 mpg vehicle is about $1248 or about $100/month.  If you bought a 25 mpg vehicle the difference would be $1623 or $135 per month.  This amount doesn't justify the increased car payment on a newer vehicle.

You'd have to a long haul truck delivery driver for a new vehicle to make sense.  That is unless you really need a new vehicle anyway.

So it seems the media has people whipped up into frenzy yet again.  Yes gas prices are high but if you can't afford $3.75 gas, you've probably got other financial problems.  Car makers would love to see Americans trade in their old cars for brand new ones.

Of course many people just want a new car and fuel efficiency will be the excuse this time.  Whereas in the past they may have needed an SUV to haul the kids to soccer practice, this time it's a hybrid to for the smug appeal (I'm better than you because I'm saving the planet).

Do the math before you rush out to buy a new "fuel efficient" car.  You're probably better off waiting until you need a new one and then buying a vehicle with better fuel economy.

Tags    Auto    Cars    Gas    Gas Prices    Saving Money    Spending & Saving

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