It seems with rising fuel prices, that everyone always scrambles to trade in their current vehicle, for something more “fuel efficient”, but are you saving yourself that much money by trading your car in? Not always! So in this article we’re going to compare fuel consumption numbers, to see how much (or how little) you’re actually going to save, if you’re driving a luxury sedan, hyrbid, or a small economy car. Then we’ll also take a look at some vehicles that will save you money at the pump, without increasing your debt as well.
So first of all let’s compare actual yearly fuel consumption costs. I’m not going to base this upon average fuel mileage or mixed fuel mileage, because most consumers look at the largest number that the vehicle will achieve and it is also what most manufacturers advertise. This chart is based on a driving average of 12,000 miles per year, with fuel prices at $4.00 per gallon:
12,000 miles per year at 20 mpg @ $4/gal = $2400/yr.
12,000 miles per year at 30 mpg @ $4/gal = $1600/yr, which saves you $800/yr over the 20mpg alternative.
12,000 miles per year at 40 mpg @ $4/gal = $1200/yr, which saves you $400/yr over the 30mpg alternative.
12,000 miles per year at 50 mpg @ $4/gal = $960/yr, which saves you $240/yr over the 40mpg alternative.
Now lets break that down to monthly figures:
12,000 miles per year at 20 mpg @ $4/gal = $200/mo.
12,000 miles per year at 30 mpg @ $4/gal = $133/mo, which saves you $77/mo over the 20mpg alternative.
12,000 miles per year at 40 mpg @ $4/gal = $100/mo, which saves you $33/mo over the 30mpg alternative.
12,000 miles per year at 50 mpg @ $4/gal = $80/mo, which saves you $20/mo over the 40mpg alternative.
Now lets break it down even further to a weekly figure(based on 52 weeks):
12,000 miles per year at 20 mpg @ $4/gal = $46/wk.
12,000 miles per year at 30 mpg @ $4/gal = $30/wk, which saves you $16/wk over the 20mpg alternative.
12,000 miles per year at 40 mpg @ $4/gal = $23/wk, which saves you $7/wk over the 30mpg alternative.
12,000 miles per year at 50 mpg @ $4/gal = $18/wk, which saves you $5/wk over the 40mpg alternative.
As you can see, breaking down the numbers, how little it actually saves you. Especially as you increase your fuel economy beyond the 30 mpg mark. Obviously going to a 30 mpg vehicle from a 20 mpg vehicle, does save a more substantial amount, but going from a 30mpg vehicle to a 40mpg vehicle doesn’t really make any sense the more you look at the numbers. Considering that most V6 mid-size sedans and almost all 4 cylinder mid-size sedans are capable of 30 mpg, why would you limit yourself to something like a Hyundai Elantra or a Ford Fiesta, when it only saves you $33/mo or $16/wk? $16/wk is one less meal eating out at a restaurant, or not eating at a fast food restaurant twice. I know it wouldn’t bother me to give that up, to be able to drive something I actually enjoy, rather than something I feel like I have to drive.
Some people have also brought up the fact that they drive more than 12,000 miles per year, maybe more like 20,000 miles per year. While you would save more at the pump, the difference between a 30 mpg vehicle and a 40 mpg vehicle would still only equate to $56/mo. While that may seem like a considerable savings to some people, it still shouldn’t be enough to warrant feeling like you have to punish yourself by driving a Ford Fiesta rather than a Nissan Maxima.
Leaving actual vehicle cost out of the equation in this situation: If I were to walk into a car showroom and the salesman proceeded to show me a Ford Fiesta that gets 40mpg, but then he shows me a Ford Fusion and tells me that he could offer me better handling, better acceleration, a nicer and more spacious interior, and more features for only an extra $56/mo. I would not hesistate to buy the Fusion over the Fiesta, because it has everything that I want.
Now fuel consumption cost isn’t the only thing you should factor in either though, you also should consider how much you will be spending on a more fuel effecient vehicle. So lets look at a few scenarios:
You are driving a 2005 Jeep Liberty 4×4 V6 with 102,000 miles, which is rated for up to 20 mpg and you owe $7,500 on it and your payment is $300/mo(based on $15,000 purchase price, financed for 5/yrs). You are considering replacing it with a new 2012 Ford Focus, which is rated for up to 40 mpg and the sticker price is $22,415. First of all you will save $100/mo on fuel consumption right away, but they only offer you $6,215 for trade in on your Jeep(based on current KBB trade in value) and you owe $7,500 on the vehicle. You will have to roll $1,285 into your new loan on the vehicle, so it will increase the amount you’re financing to $23,700. So your new payment will be $474/mo, which is $174/mo more than you’re currently spending, BUT WAIT you’re saving $100/mo in fuel! Even with that, you will still increase your monthly expense by $74/mo AND you also are extending your debt for another 5 years. So not only are you increasing your monthly expenses, you’re also extending your payments even longer.
Now lets take that same 2005 Jeep Liberty for example: You still owe $7,500 on the vehicle, but at $300/mo, the loan will be paid off in 2 years. It will cost an extra $100/mo to operate until the loan is paid off, but once the loan is paid off, you will eliminate the $300/mo payment. So once that happens, you would be saving yourself $274/mo over driving the Focus that you would still be paying on for another 3 years! That’s $9,684 that you’ll save!
Ok, next lets take a look at a 2001 Toyota 4Runner V6 2WD with 145,000 miles, which is rated for up to roughly 20 mpg as well. The vehicle is paid for and is in good condition, so you find a 2007 Toyota Camry LE 4cyl with 54,000 miles and is rated for up to 30mpg. The dealership is asking $16,900 for the Camry(Which is slightly less than current average selling price) and they offer you $4,425 for your 4Runner(which is current KBB trade-in value). The Camry will cost you $12,475 after trade-in of your current vehicle, so your payment will be $250/mo and you’ll also be saving $77/mo in fuel expenses, so you will increase your monthly expense by $173/mo.
You’ll probably notice that the figures are nearly the same in both scenario #1 and #2, but the key difference is the vehicle is scenario #2 is paid for. Also in scenario #2, the consumer is not having to drastically downsize their vehicle to save money on fuel either, and with their current vehicle having higher mileage, they’re probably due for a replacement as well. The consumer in scenario #1 is likely more desperate than the one in scenario #2 as well, seeing as the second consumer is trading in a vehicle that is paid off, with higher mileage, likely to replace it with something newer and more effecient. Everyone has different financial situations, but in scenario #1, if the consumer needs to increase their fuel mileage that drastically to save money, then they should be looking for a vehicle that they could buy with cash or that could eat up more of their negative equity in the Jeep, rather than rolling that negative equity into a higher priced loan and increasing their payment, when they’re trying to reduce their expenses.
Now say you are in that situation and you would like to buy a older car that gets up 30 – 40 mpg, that you could purchase with cash, or for around $5,000. Here are a few examples to look for:
|Vehicle(Year, Make, Model, Drivetrain)||MPG|
|1995 Honda Civic – 1.5L 4cyl, 5spd manual||33||41||$3,125||$4,375|
|1997 Acura Integra – 1.8L 4cyl, Automatic||21||29||$3,150||$4,575|
|2000 Nissan Sentra – 1.8L 4cyl, Automatic||24||31||$3,175||$4,800|
|2000 Audi A4(FWD) – 1.8L Turbo 4cyl, 5spd manual||21||29||$4,120||$6,020|
These are of course just some random examples, there are many other cars that get good fuel economy as well, and it’s very easy to research these things yourself. I will include some links below to help you find out what you should pay for a vehicle and how to find out fuel mileage numbers, along with some other resources to assist you in finding the right vehicle.
Fuel Economy: http://www.fueleconomy.gov
Automotive Pricing: http://www.kbb.com
Automotive Reviews, Safety Ratings, and Information: http://www.edmunds.com
I hope this article will help you make an informed decision about your next vehicle purchase, but I know that everyone has different financial situations, along with different needs from an automobile and these scenarios may not apply to your situation at all. The most important thing that I hope you’ll take from this though is: Do your research before rushing out and trying to get rid of a vehicle, just to save a few bucks at the pump.