Old and busted versus new hotness. Ah yes, the debate that probably dates back to biblical times with people arguing with their spouses in Aramaic on whether they should buy a new pack mule or not. The question stands: Will buying a new, more economical car actually save you money over keeping your current car? I hear this all the time as a reason why someone is looking to buy a new car, but without doing some math, there really is no easy answer.
As new vehicles coming out get more and more fuel efficient, this is a pretty common little dilemma that many of us have found ourselves contemplating at one time or another. Now with the influx of more and more affordable EVs on the market, this question more relevant than ever.
So which will save you more money in the long run? Taking on a car payment in order to save fuel with one of these new gas saving cars, or keep your current commuter going and holding off for a few years (until reliability starts becoming a serious issue)?
To explore this, I decided to put together this handy little fuel savings calculator to see how the two options would stack up in terms of monthly cost. This is really just to get ballpark numbers that you can add more in-depth variables to, like a difference in insurance premiums and maintenance. Depending on how long your commute is, and the difference in car payment, you might be surprised at what you come up with. Try it yourself and plug in some numbers to get a quick baseline for your situation!
Fuel savings calculator – old VS new:
I decided to set-up an example that I would have expected to be a no-brainer before actually doing the math. Let’s say I went from my aging BMW 528i (seen up top) that gets 25 MPG, and traded up to a brand new Toyota Prius that literally doubles that mileage to 50 MPG:
After plugging in my mileage, gas prices, and commute, I was very surprised to find that this would put me roughly $310 in the hole every month — and that’s before factoring in more expensive insurance. While my car isn’t the most reliable thing out there, it’s a pretty safe bet that it wouldn’t cost me near than $3,700 a year just to keep it running in order to offset the cost of the Prius. You can see my numbers here.
OK, but you’re still paying for gas with the Prius so…
What about Tesla gas savings or any other EV?
Alright, here’s where we should see a more obvious savings, right? I went and checked how much a monthly payment would be on a base Model 3 with that same $2,500 down, and came away with a $509 a month payment. To really play to the Tesla gas savings, I set the EV’s fuel mileage to 9999 MPG (essentially ignoring the electricity cost of charging it). Then to prepare for the worst, I set the cost per gallon to $5 just in case gas prices go crazy again.
Surely now THIS would save me money, right?
I would be out an additional $260 a month over my current situation, or a little over $3k a year. Again, this is before a difference in insurance premiums and maintenance costs, so these are numbers to build off of to make a final decision, but this should give you a good idea of the overall picture here. I do find it interesting how the Tesla comes out a little cheaper monthly than the Prius, at least on the face of things.
Your numbers will almost assuredly be different, so try it out yourself. For instance, I don’t have a car payment now, so if you do, the difference might not be as large.
Maybe it won’t save me money, but what if I just want nice stuff?
Of course, that’s a huge reason why we buy new cars. The X-factor that this calculator doesn’t take into account is that a new car is just a nice thing to have, and the extra cost might be worth it for that fact alone. Modern amenities like the latest safety equipment, Bluetooth, Apple Carplay/Android Auto, and the convenience of a factory warranty are all things to consider that just plain improve our quality of life.
As far as I’m concerned, the more information and tools at your disposal to figure these things out the better. That way you know your options better than the salesman who has an incentive to convince you otherwise.
What would be the ideal commuter to save fuel and other costs?
I’m a big believer in taking your time and finding the right used car that can strike the balance between easy reliability, economy, and relatively modern comforts, but without the big car payment, insurance premium, and depreciation hit. It’s amazing just how cheap an 5-10 year old economy car can be. You can get a Prius that hits 98% of the economy of a new one for half the cost. For a fun option, an older Golf GTI is still a practical car that gets excellent mileage, while satisfying your right-foot-down cravings.
Sure, it won’t be the flashiest or highest tech, but it’ll get the job done well, and it’ll do it cheap. At that point, insurance is cheap, and parts are aplenty, and your local shops have been working on them for years, so if something does go wrong, it’s probably not going to cost you an arm and a leg. This sentiment goes doubly so if you do your work yourself.
Like I said above, it’s always good to have options available to you. I’m not out here telling everyone to be the most frugal you can be, but if you really start weighing what’s actually important to you in a car, paying a premium for some things just might not seem as worth it as before. Plus, modern niceties like Bluetooth, Apple Carplay, and Android Auto are built into many aftermarket stereo units, so it’s not like a new car is the only way to get these amenities
This information for you might add up to still wanting a new car, and I would not dissuade you from that at all. I bought a brand new car in 2014, and it turned out that “shiny and new” didn’t end up being worth the car payment for me afterall, and I went back to buying cheaper used cars in cash.
Now whether I’m buying the right used cars, that’s another story altogether. If you do decide to keep your old gas guzzler, here are a few tips, tricks, and myths on how to save fuel.
So what did you come up with? Put your results down below!