Should Rising Gas Prices Make You Buy a New Car?

cars and gas

Unless you’ve been living under a rock, you know that gas prices are soaring sky high. As a result, many people are rushing out to trade in their older, larger, inefficient cars for newer smaller, more efficient models. But is this rush to trade really necessary, or even a good thing?

Certainly if you’re driving a Hummer (or other large or extra large SUV/truck) that gets, at best, 13 MPG on the highway, you would be better served financially by switching to something smaller and more efficient. It’s not difficult to find a car that can double that MPG. However, what if you own a smaller SUV or a mini-van? Can you really do a lot better financially by switching?

Looking at many of the major mini-vans and mid-size SUV’s on the road today, the average highway MPG is around 25 MPG. The average MPG for many of the major mid-size cars is around 30 MPG. As with anything, some are better and some are worse, but these are the averages. So if you’re driving a mid-size van or SUV and switch to a mid-sized car, you’ll save some fuel, but only an average of 5 MPG. Even switching to a much smaller, compact or economy car will only get you an average of 32 MPG on the highway, not much different than the mid-sized car. To reap significant savings you’d need to move to a hybrid of some sort, where the highway MPG can jump as high as 45 MPG.

The problem in the U.S. is that we have some of the worst fuel economy standards of any major nation. We simply don’t require that our cars and trucks get the gas mileage that they could. If we adopted the same standards as some European nations, our cars could easily be getting 40 MPG on average, with many pushing fifty miles per gallon. But because we won’t adopt such standards, we’re stuck with lower MPG’s that make switching to smaller cars almost no better than driving larger cars.

Other factors may eat into any potential savings, as well. How much you can sell your current vehicle for will have a big impact on your savings. If you can’t sell your current car for more than or as much as you owe, you’ll have to foot the bill for the difference on your old loan in addition to paying for the newer car. With the market for SUV’s, vans and trucks shrinking, it can be difficult to get the price you need for your current car. This can lead to larger monthly payments (paying for a newer car, as well as paying off the loan on the old car) that eat into any money you might save at the pump.

If you own your car outright, what you can sell it for is less of a factor, although the amount you can get may dictate what you can afford in terms of a newer car. If you don’t have a lot of cash lying around, a low resale on your current car could mean that you have less to spend on a new car, or that you now have a car payment where before you had none. If you’re not currently making payments, make certain to take any new payment into account when calculating potential savings at the gas pump. You may be trading one savings for another expense.

Also remember that any newer vehicle is likely to cost you more in taxes and insurance. Newer vehicles are almost always more expensive to insure because the cost to replace them is greater. And, because they are newer and worth more, the taxes are going to be higher. How much higher, of course, depends on what you get and what you’ve been driving, but do your research to make certain that your fuel savings won’t be eaten up by higher insurance and tax payments.

In most cases, switching just to save a few bucks on gasoline isn’t worth it. Unless you are moving down from a giant SUV, the move from van to car or mid-sized SUV to car won’t save you that much. It may end up costing you more once you factor in new payments, insurance, and taxes. Obviously, if you need a new car because your old one has given up or has become too expensive to maintain you want to shop for the best MPG you can get so that, moving forward, you can save as much as possible. But if you’re simply looking to trade a perfectly good car to save on gas, you might be better off holding on to your old car for a while longer until you really need a newer vehicle.

In the meantime, look for other ways to save on fuel. Some tried and true ideas:

  • Slowing down is a great fuel saver. Most cars get their best MPG around 60 MPH on the highway. As you go above that, your fuel economy drops rapidly.
  • Make certain your car is well maintained. Proper air pressure in the tires, clean oil and filters, and proper fluid levels all contribute to help a car get its best MPG.
  • Don’t carry everything you own in the car because the extra load is a drag on your fuel economy. Similarly, try to avoid using a “snail” or other cargo carrier on your roof as it creates more drag which lowers fuel economy.
  • Combine your errands and do as much as possible in one trip to save on repeat trips.
  • Plan your route to do the least amount of backtracking.
  • Try to avoid sitting in rush hour traffic. Leave for work and home earlier or later to avoid the worst traffic. Similarly, if you don’t work outside the home, time your errands to avoid rush hours.
  • Don’t go out for lunch every day. Not only does it cost more for the food, but also in the travel cost of getting to the restaurant. Bring your lunch and eat in.
  • If you can find someone to share a ride with, even if only once per week, do it. Carpooling is a big fuel saver for both parties.
  • Don’t idle at the drive thru. Turn off the engine while you wait for your food or money. Better yet, go inside and conduct your business.

I want to make one more point about switching cars just to save fuel. Yes, saving fuel is good for the environment. I don’t dispute that. But it’s better for the environment to keep a well-maintained, functioning car on the road for longer, rather than buying new cars frequently. New cars require tremendous amounts of resources and energy to build. The longer you can keep your older car on the road and functioning well, the fewer resources that are gobbled up to make new cars. Additionally, fewer cars end up in landfills and junk yards. If everyone kept their cars for extended periods of time, we would save more resources and energy than if everyone switched to smaller cars.

When you have no other option, when your old car has truly taken its last breath, switching to a fuel efficient car is the way to go. I highly recommend that, when the time comes, you go for the best fuel economy you can get. But until the time comes when a newer car is needed (not wanted), I recommend keeping your old car for as long as possible and keeping it well maintained. That’s the best way to go, both for your wallet and for the environment.

Image courtesy of Cayusa

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11 Responses to Should Rising Gas Prices Make You Buy a New Car?

  1. Lisa says:

    I keep my cars 8-12 years. When I was married we had 3 vehicles for 2 people because in the cycle of vehicles. We had to be ready for one of the 2 older vehicles to be in the shop and then we still had vehicles to drive to work. We did the numbers and it was still cheaper to keep the 3rd vehicle. The third vehicle now is a 19 year old truck. It went to the dump, hardware store, and once or twice a year to work for 8 years. Now it goes a few miles a day to my son’s HS.

  2. Lizzard says:

    I have a SUV that will be paid off in July of 08. I have looked @ trading for similar vehicle that uses ethanol (E85). The cost benefit just is not there due to the decreased MPG that ethanol based fuel offers. (About 25% LESS MPG) So in my case, sticking with my Current SUV makes better financial sense than investing in a newer smaller better mileage vehicle.

  3. Annie J says:

    I wrote this post a while back. It illustrates nearly every point you made in your post.

    We’ll be keeping our minivan.

  4. D. Bolesny says:

    I own a Toyota Sienna minivan (23 mpg) and a Yamaha 650cc V-Star Classic motorcycle (50 mpg). Now that the weather has gotten nice, I’ve just parked the van and am using it only on the weekend when I run errands. The motorcycle works great as my ‘commute vehicle’ (I live 50 miles away from my job). I’m female, so I was definitely considered a bit “strange” when I first started coming to work on the motorcycle (before the high fuel prices). But now my co-workers have realized I might be ‘strange’ but I’m not stupid!
    Oh – and using the motorcycle for my primary to/from work vehicle also saves me money on my insurance. When they ask that question: Do you use this vehicle for commuting to work or school? I can honestly answer (for the van), “No!”
    But of course, if one is going to commute on a motorcycle they must be very comfortable doing so – they must ride conservatively and always, always be aware of the other cars around them. I used to race motorcycles, so I have a bit of an edge, as I was trained from the get-go to drive defensively. Bottom Line: Not recommended for everyone, but good if you feel comfortable with it.

  5. chris says:

    If you have to buy a car to save $$ in the future, then you have no right to buy a car now. My rule is this….unless it is an emergency:
    a.)don’t buy anything unless you have the $$ to completely replace it if it is stolen….or repair it if it needs routine repairs. Only good insurance(as opposed to “shady” insurance companies with unrealistically low rates) will apply.

    Basically, if my boss or job doesn’t pay enough to justify the luxury of owning/renting a vehicle, then I will not get one. I will walk, bike, or bus it to the job. WE should not allow the elites at the top to make us scratch & fight for the tiny morsels of $$ to buy things we can barely afford(cars) with such a low salary. They live on (?well earned) large amounts of $$$ and should dispense it with great joy to their employees(and competitors, which I won’t get into)

  6. devon says:

    Rising gas prices should get you off your butt and onto a bicycle.

  7. oenon says:

    Also, I think it’s about 30% of the fuel used by a car is actually used during it’s production. We need to use our cars as long as possible.

  8. Cindy M says:

    I agree with Chris above. Just got rid of my 10-year-old car because of transmission troubles I didn’t want to pay to fix. I donated it to the Salvation Army. Since I’m actually managing quite well so far without a car, I’m not planning to buy another one soon, and I frankly truly don’t miss having a car. I work from my home in the evenings and am fairly close to everything plus have 3 bus routes within walking distance of me that will take me nearly anywhere I need to go. I’m walking more. I could care less what anybody thinks. I get that they feel sorry for me, thinking I must be broke. I don’t see any negatives to my decision at this point but could always change my mind. I feel a sense of freedom I haven’t had since I was a teenager.

  9. Bazman says:

    Move from England to America for real savings. gas costs 10 bucks a gallon and diesel 11 bucks.
    You don’t believe me do you?
    1 mile from my house. Large letters
    Diesel 110.9p Petrol 112.9p (In liters)
    70p is tax.retailer about 4p and the rest profit. The petrol is actually quite cheap.
    Cigarettes are 11 dollars.
    To fill up a 2.0 Ford Mondeo Called Contour or Mercury Mystique in America I think. A common car here. 30 mpg would cost you with 20 reasonable quality fags 129 US dollars Or 66 quid. Buy a Burger meal (fries and small Cola) add another 8 dollars.
    Expensive lunch break huh?

  10. Kate Morris says:

    I am so happy to hear about posts like this. And Annie’s as well. Sometimes the best thing isn’t buying a new car but using the one you have that much better. Great job!

  11. carlinfrank says:

    As far as looks goes, if your buying the Civic EX-L sedan, then i would just say go with the Accord EX-L. To me, and to many people, the Civic sedan has an awkward looking rear end, and the Accord looks a lot more elegant then the Civic sedan. If you don’t mind getting a coupe, get a Civic coupe! I love the coupe, i get a lot of compliments on it, it looks great. I do like the look of the Accord coupe, but its not worth the price if you ask me. With rising gas prices today, i’d rather save that money for gasoline. I think most people would, and when the Civic EX-L coupe gets better gas mileage and still looks good, why not?

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