Intro: With gas prices inching past $4 per gallon, you might be wondering if a hybrid vehicle is the answer to rising fuel costs. Depending on the age of your current car, how far you drive, and where you live ... the hybrid vs. fuel debate is more complicated than you'd expect.
Hybrids cost more than fuel-powered vehicles, they tend to be slightly more expensive to insure -- but the fuel savings will make up for it, right? Well, not necessarily.
Take SOT: Greg McBride, Senior Financial Analyst, Bankrate.com
"Deciding to purchase a hybrid vehicle is a decision based more on the benefit to the environment, rather than the benefit to your pocket book."
Take Full Page:
While you might visit the gas pump less often, consider the other aspects of buying a hybrid that could eat away at your fuel savings. The sticker price is often several thousand dollars higher than the fuel version. And you may be surprised to learn that it costs more to insure a hybrid. So, if you're thinking that a hybrid vehicle purchase will save you money in the long run, be sure to use some real-world numbers in making your decision.
Ford Fusion Hybrid: $27, 232
Ford Fusion Fuel: $20, 176
Difference in price: $7,056
For example, let's look at the Ford Fusion. The hybrid version can cost $7,000 more than the fuel version and, based on sample insurance quotes, a modest $60 more a year to insure.
Annual insurance cost:
Hybrid: $1,151/year approximately
Fuel: $1,091/year approximately
= $60 more a year to insure
Keep full page up:
Now, the fuel savings by themselves look impressive. Based on driving 12,000 miles per year -- half in the city and half on the highway -- and at $4 per gallon for gasoline, the hybrid saves approximately $500 per year.
Annual Fuel Savings:
12,000 miles per year = approximately $500/year
Net savings =$440/year
$7000 sticker price difference
16 years to break even
SOT: Greg McBride
"With net annual savings of $440, it will take 16 years to recoup the additional $7,000 paid for the car ... never mind inflation and financing costs."
All-in-all, the hybrid costs you more money overall. But if your main goal is saving the environment, not necessarily your budget then it can be a sensible move.
To find out if you're a good candidate to purchase a hybrid vehicle, you can use Bankrate.com's, Is a hybrid car right for you calculator. I'm Kristin Arnold.
More From Bankrate.com