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Gas prices have come down a little bit in the last week, but they are still at record levels. While many people may be trading in their old gas guzzler, I’m going to offer a bit of crazy advice…
If you want to save money… Buy an SUV.
Before you yell at me and tell me how stupid I am, let me explain:
Right now a Toyota Prius Hybrid, new or less than a year old is selling for around $25,000 and that’s if you can even find one! High gas prices have put everyone owning an SUV or large truck into a selling frenzy. Owners and dealers are making huge price cuts just to get rid of them. For example, you can currently find a one year old Ford Explorer for around $15,000… that’s a $10,000 difference!
Still, you will be saving money on gas with the Prius so let’s see how the cost differs over 5 years.
So even after 5 years of driving, you will have spent approximately $9,200 more on fuel for the SUV that you spent $10,000 less on in the first place! Does that sound like saving money to you?
Now I’m not saying that you shouldn’t buy a hybrid. There are a lot of great reasons to buy a hybrid or a more fuel efficient car beyond the financial aspects, namely the fact that using less gas is better for the environment. What I am saying is that you should actually think things through from every angle before making a decision as big as buying a car. Selling your one year old SUV and spending $10,000 more on a hybrid is probably not a good financial decision. Think rationally and do the math, chances are that no matter what kind of car you are driving right now, keeping it will be cheaper than buy a new one.
Edit:
Some readers have pointed out that there are more factors to be included instead of just price and fuel cost. If we wanted to be really thorough we could get into depreciation, resale, maintenance cost, insurance, and even the present value of money versus the future value. Also the fact that if gas prices climb above $4.50 the SUV becomes much more expensive. The point I am trying to make is not neccessarily to go buy an SUV.
I believe that the current fuel prices, whether short or long term, have caused many people to irrationally freak out and think that they need to sell their new SUV they just purchased a year ago for a substantial loss and buy spend thousands of dollars more on a car that may only save $1,000 a year on fuel. This in turn has caused the market to get flooded with dirt cheap SUVs that are selling for a fraction of what they went for a year ago, and possibly even less than they cost to make. Many people will tell you that fuel prices are heading to $8.00/gallon or even $15.00/gallon. If this is the case, then I guarantee that even the 45 Mpg that a hybrid gets won’t be good enough. Others will tell you that speculators have driven up the cost of oil and once they leave the market, it will settle at around $2-3/gallon. I personally believe it will be somewhere in between, that high gas prices are here to stay but that they probably won’t make it to $8/gallon anytime soon. If they do get that high, then people will be trading in their hybrids for electric and hydrogen cars and at another huge loss.
Once again, the point I am trying to make is not neccessarily to go buy an SUV. What I am saying is that if you have an SUV, think about all of the financial aspects before you sell it at a huge loss, and if you have always wanted an SUV but couldn’t afford it… Now may actually be a decent time to think about it.
Feel free to disagree with anything I say, I know some of you will.
