The Candidates
If people want to save money on gas, they should do what I did: buy an old car. I paid $5500 and my car gets 13 mph (72 buick with a 455). A new Toyota Prius starts at $21,000. Taxes, destination charge, etc. will knock it up to $23,000. I have already saved $17,500. This doesn’t even account for the money lost in interest either through a loan or investing.
Another way to save money is to learn to work on your car. Unless you have a fancy $30,000 Toyota computer you will be able to do very little work yourself on a Prius. So you are stuck paying $90 hour dealer shop rates plus sky high parts. I pay $0 an hour shop fee and 72 Buick basic maintenance parts probably run about 10% the cost of new Toyota parts since GM parts are cheap and readily available. Basic maintenance is super simple, will save you tons of money and requires about $300 investment in tools. Your basic tuneup on your Prius will be double that.
If people want a brake from gas prices, start thinking a little more before you buy your car off a lot.
By the time a Prius caches up money-wise to my Buick through better gas mileage, it will be an old relic sitting in a junkyard. And none of this accounts for the cool factor of Driving a 450 hp, 520 lb of torque street monster.
So before we complain about the high gas prices, let’s just remember it’s all money in money out.
June 12th, 2008 at 12:17 pm
But Jason…what about the polar bears?
June 12th, 2008 at 12:18 pm
Yeah, but people buy new cars for more than just saving on gas.
They also like the look, comfort, and the new technology in them.
Most people would rather pay more to have an ‘08 Prius than drive a ‘72 Buick.
I drive a ‘99 Toyota Corolla and it gets 30 MPG. It was $5,000, used.
June 12th, 2008 at 12:23 pm
Alex,
That works even better. Except repair costs.
June 12th, 2008 at 12:24 pm
I would add, if they can afford 20,000+ for comfort than there isn’t a lot of room for complaining about $4 a gallon.
June 12th, 2008 at 12:30 pm
1. Polar Bears don’t drive. But if they did I would make the same recommendations.
June 12th, 2008 at 12:40 pm
I like your general premise-but many (most?) Americans are far too materialistic to follow your advice.
I’m also pretty sure that any initial repairs on a new Toyota will be covered by warranty.
June 12th, 2008 at 12:44 pm
Eric,
I think you’re right we want new everything.
I don’t think maintanance is covered by a warranty, usually it’s only repair unless it’s some sort of promotion.
June 12th, 2008 at 12:46 pm
I did a little research and the facts do not back this up.
Priuses (Prii?) are not depreciating much. Went to Edmunds.com and compared a 2007 Prius with 15K miles in “outstanding” condition, to a 2006 Prius with 30K miles in “clean” condition. Difference? $2,040 in depreciation.
Now take the difference in the cost of gas at $4/gal for 15K miles between 45mpg and 15mpg. Difference? $2,667.
You’re only saving if you’re doing your own repairs. Except the Prius is under warranty. So now you’re looking at the insurance difference, which still won’t be $600+/year.
June 12th, 2008 at 12:49 pm
My cousin bought a used Geo Metro and completely redid it. Granted it’s not going to be a chick magnet, but the gas mileage is really good. Aside from the fact that he has to floor it to go 45 miles per hour up a 20-degree incline, it does the trick
June 12th, 2008 at 12:52 pm
#5 I was just joking. Perhaps I should have added one of these:
June 12th, 2008 at 12:58 pm
Metro,
Depreciation isn’t part of the equation unless I am missing something. Especially since my 72 Buick is gaining value.
If your # of $2667.00 is correct for gas mileage you are loking at 10 years to recoup the costs without interest. With interest you are looking at more. Considering 10 years of depreciation value, interest, mainantanece cost, and repair cost once out of warranty, you are probably looking at 15- 20 years to catch up.
It’s principle anyways. Obviously Alex will get a better break in his 99 corralla if he does his own repairs than I will in my 72 buick. Except he has depreciation where I don’t. not too mention a $1500 transmission swap in my 72 buick will get me over 20 mpg.
June 12th, 2008 at 12:59 pm
Metro,
Sorry, I meant Depreciation wasn’t part of my original equation. But once you add it, things are much more favorable to the Buick.
June 12th, 2008 at 12:59 pm
Big S,
I know, so was I.
June 12th, 2008 at 1:00 pm
Jason, huh?
If I buy a $20,000 car, it isn’t worth $0 at the end of the year. The Prius depreciates by just over $2,000 after a year of time, 15K miles, and a little wear and tear.
The depreciation IS the standard to compare gas costs with over a given period of time.
June 12th, 2008 at 1:10 pm
maybe I am confused on what point you are trying to make.
The Prius is depreciating 2040 a year if I read you right. That would be in addition to the upfront cost of purchasing it since the Buick has no depreciation. I would add any car older than 20 years at this point will have no depreciation.
But you may see this more clearly than I do, so explain where I am wrong.
June 12th, 2008 at 1:12 pm
No, the depreciation is in lieu of the upfront cost.
If I buy a $20K asset on Jan 1 and it is worth $18K on Dec 31, I am not out $20K. I am out $2K.
June 12th, 2008 at 1:12 pm
Priuses (Prii?) are not depreciating much. Went to Edmunds.com and compared a 2007 Prius with 15K miles in “outstanding” condition, to a 2006 Prius with 30K miles in “clean” condition. Difference? $2,040 in depreciation.
I assume part of the reason for the low depreciation of Priuses (yes, that’s the correct plural) is the insane market for them right now. When there are 6-month waiting lists for a new one, a one or two year old model is going to tgo for about the same. There’s a “premium” for a new one hidden in the assumed costs of the wait.
June 12th, 2008 at 1:13 pm
If you want to factor in the cost of the interest, that is more than legit, as the typical person won’t be paying cash.
June 12th, 2008 at 1:17 pm
One year into a 60-mo 20K auto loan at 7% interest, the interest portion of the payments is around $100.
So $1,200 a year in interest, and indeed, your guzzler may be less expensive overall.
But it’s not the ~$20,000 you keep talking about.
June 12th, 2008 at 1:23 pm
BigS,
Demand for the Prius will plummet once the electric Nissan Mixim hits the market in 2-4 years.
http://www.carbodydesign.com/archive/2007/08/30-nissan-mixim-concept/
June 12th, 2008 at 1:23 pm
I’ve got a ‘73 Cougar with a 351 Cleveland in it. Get this- I paid 300$ for it from some guys who just wanted the engine.
Still hate the gas prices, but yeah, the lack of labor costs is pretty substantial.
June 12th, 2008 at 1:33 pm
Metro,
Either way you talk you factor in interest, since 20,000K aitting in car is loosing interest rather than in a CD or whatever.
Insurance on a new car would be around 200a month, it would vary though depending on a lot. Insurance on a 72 Buick is about 500 a year since there is no comprehensive on it, only liability.
Kelly Blue Book which is the standard for car pricing puts a 2006 Prius at $15,000. This would be in good condition (most care fall in this category) and with 45000 mile. A 2006 would have been bought in 2005 and would have 3 years of driving on it. A new Prius is sitting around 26-27K out the door when you consider dealer markup (something I didn’t include in the post) tax, and delivery charges. So in three years time you are averaging closer to 3000K in depreciation.
Plus the Prius is an exception, what about people buying card that will average 25- 30 MPG?
Maintenance is what I would add to the cost, since even new cars require tuneups, timing and serpentine belt, brakes, etc. Those are much more expensive on a Prius than a 72 Buick.
When I was using the 20K number that was total cost, not yearly. Assuming you kept the car forever or until you caught up with the Buick. In that situation the Prius would eventiually hit 0 or at least less than $1000. I guess if you are always trading in it’s different. But even then you have the constant reacurring costs of loan fees, taxes, title, etc.
June 12th, 2008 at 1:34 pm
Robbie,
Very nice.
June 12th, 2008 at 1:38 pm
You have to look at the depreciation vs gas usage over the same period, whether you want to make that 1 year or 20 years.
Buying a new car does cost extra in first-year depreciation. So buy a car 1-2 years old. That’s why I used 2007 and 2006 in my examples.
Maintenance on late-model cars is minimal and often covered or partially covered by warranty.
June 12th, 2008 at 1:44 pm
Metro, if in 15 years a Prius is worth 1000 bucks and my Buick is worth 8000 (it appreciates like any collectable) then the net loss of buying a Prius over a Buick 15 years later would be 30K plus. Add interest to it and maintanance, ets. The Prius looses hands down. It would never catch up with $4 a gallon gas.
Add to that, a $1200 transmission change would put the Buick at 17-20 mpg and 3000 transmission would puyt the buick at 25mpg + and it’a an even farther disparity.
June 12th, 2008 at 1:45 pm
Basically we are saying the same thing, you are going yearly, I am going lifetime of the car.
June 12th, 2008 at 1:46 pm
So, after 10 years, the gas savings would be $26,667, paying for the entire cost of the car. And the car would have another 10 years of similar gas savings.
But since the point was to contrast driving old beasts with comfortable late-model cars, I thought it make more sense to look at 1 year depreciation for a relatively late model car vs. 1 year of gas savings, since the owner would presumably be trading up every few years.
June 12th, 2008 at 1:46 pm
Jason, if we’re talking about putting 15K miles on the car a year, your car is not going to be appreciating.
June 12th, 2008 at 1:47 pm
Metro,
Sure it will. My car doesn’t have the original engine. No one counts miles on collector cars without the original engine.
June 12th, 2008 at 1:50 pm
So, after 10 years, the gas savings would be $26,667, paying for the entire cost of the car. And the car would have another 10 years of similar gas savings.
Fine, but it still doesn’t pay. You still are loosing money, esp. with interest, maintenance, repairs, insurance, etc.
June 12th, 2008 at 1:52 pm
And we are talking two extremes here. My 67 Special got closer to 20 mpg, and most people aren’t buying new priuses. It’s a correct principle I offered here in the post. You loose money when you buy new over old. Alex, is probably in the best position with his Corralla if he does his own repairs and can be resourceful on parts.
June 12th, 2008 at 2:03 pm
Not to beat a dead horse…
A 27,000 car payment at 7.18 interest is $535 at month (60 months). Add $111 in fuel cost (1250 miles a month at 45 mpg at $4 a gallon) and $200 in insurance you are left with $846 monthly cost.
The Buick was paid cash so maybe I loose about $9 a month in interest, plus $416 in gas (same terms only mpg is at 13) and $40 a month in insurance. I am mow at $446 monthly operating cost.
That is a difference of $400 a month while in the loan.
June 12th, 2008 at 2:44 pm
The Constitution’s Solution To High Gas Prices:
Article I, Section X
June 12th, 2008 at 3:06 pm
Great “solution”, Jason. Reminds me of McCain’s gas tax holiday “solution”. Isn’t the idea to be focusing on the long run? Or are we going to satisfy ourselves with victories that are similar to shooting ourselves in the foot?
June 12th, 2008 at 3:22 pm
The website’s up now: http://www.campaignforliberty.com/
June 12th, 2008 at 4:25 pm
What about safety? And convenience - 13 mpg means I have to stop at the gas station more times.
June 12th, 2008 at 5:42 pm
Ajay,
Bigger gas tanks. Also, these you can refill on Empty, with new cars you shouldn’t let go past 1/3 tank due to the electric Fuel pump.
FredFighter-
I don’t know how spending less money is focusing on the short run. Good personal financial planning is longterm thinking. Unless your talking about our melting ice caps that aren’t melting.
June 12th, 2008 at 8:23 pm
I have a dead 85 Volvo station wagon that I paid 1200 for a few years back. I put only 300 in repairs and about 80 gallons of gas over the past few years (i drive very very infrequently). The strategy of buying “cheap” certainly worked with this energy miser. But that includes several caveats:
- I live in a small city, one mile from work and two from shopping
- It doesnt rain here at all for 7 months.
- I am in good physical shape and routinely bike my self, my kids and my goods.
- I also have a fully paid for 2002 TDI Jetta (wife’s vehicle).
My dead volvo repair bill is more than my purchase price.
I dont need to repair or replace it until the September or October.
My commute also lends itself to one of those little electric vehicles.
Decisions…
June 14th, 2008 at 12:12 am
I just traded my 2003 Malibu for a 1998 Honda with 250,000 miles. The car place also replaced the timing (belt? chain?)as part of the deal, and new hoses. The body looks new, including the paint job (champagne) and the inside looks new. It costs me much less in gas. The Malibu was getting 20 mpg and the Honda is getting 27.
June 14th, 2008 at 10:23 am
Sammy,
I have a 2005 Malibu, and if I feather peddle it I get 45 on the highway and 30-36 around town.