Dave C. wrote:
yeah. neat. to break it down... if you cant get (or dont want) a VW
diesel, or a hybrid, the geo metro is the cheapest choice, followed by a
civic hatch

Actually, both of those are a lot more expensive than what you are currently
driving, unless what you are currently driving is financed. The addition of
a car payment (plus increased insurance, if you are required to carry full
coverage again because your new car is financed) will more than wipe out any
potential savings you'd see at the fuel pump.

This is true for a limited period. Let's say it takes you 5 years to
pay off that used car.

But what happens after the 5 years? After 5 years, the payments go away
but the improved fuel efficiency remains. Then it actually is cheaper
each month. Depending on the additional cost of the fuel efficient car,
it might eventually pay off.

For example, say your current car gets 15 mpg and you want to upgrade to
a car that gets 30 mpg, and it'll cost you $10000 to upgrade. Also,
let's say gas is $3/gallon and you drive 15,000 miles a year. Each
year, the 30 mpg car will use $1500 of fuel, and the 15 mpg car will
use $3000 of fuel. So, you save $1500/year in fuel.

Now, if you pay 6% interest on a loan for $10,000, the monthly payment
would be $193.33, and you're going to make $2320 of payments per year.
So, for the first 5 years, it costs you $820/year extra, for a total
of $4100 extra.

But in the 6th year, you save $1500. In the 7th year, you save another
$1500. Near the end of 8th year, you break even. In the 9th year, you
come out ahead.

The situation is different if it costs you only $5000 to upgrade from
a 15 mpg car to a 30 mpg car. If you get a 5 year loan on that at 6%,
then your monthly payment is $96.66, and you pay $1160/yr in payments.
But if you drive that 15,000 miles a year, you save $1500/yr in gas.
So, you come out ahead the very first month!

And this really is a plausible scenario. I know a few people with
older big American cars (and vans) with V8 engines that get 15mpg,
and their car is worth something like $1000. If they could replace
it with a $6000 car that gets 30mpg, it only costs them $5000 to
upgrade, and it really is worth it if they drive a lot.

So basically, it might be worth it or it might not. It all depends on:

1. the difference in value between your current car and a more
fuel-efficient one (which equates to how much it costs to upgrade).
2. the difference in mileage between the car you have now and a
more fuel-efficient one.
3. how much you drive.

Well, it also depends on the price of gas, but that's harder to predict
and way harder to control... :-)

- Logan