I know that we all know and love our cars/trucks/vans/motorcycles and we all love the freedom to go where ever we want, when we want, but we all need to take a serious look at how much we spend on that freedom. We need to do so because there is serious money to be saved on the table! I currently own a vehicle that would easily be placed into the luxury vehicle category. Prior to owning it, I had placed money aside that was meant to buy a beautiful, money saving, reliable, and common vehicle. Unfortunately, American consumerism got to me first.
My current frugal minded self is quite ashamed. It had been made hard to avoid because I was able to obtain an incredibly low rate loan (under 2%) and I talked my way into a seriously low price for the vehicle over the course of a week’s discussion with the salesman. Unfortunately, the true cost of it came quickly to light when the numbers were broken down. Let’s break down the numbers with a hypothetical vehicle that resembles my current vehicle:
Luxury Gas Sucker Vehicle 6.0
Price of vehicle after tax: $23,000
Total cost of vehicle with financing over 5 years at:
2% financing: $24,188.31
3% financing: $24,796.79
4% financing: $25,414.80
5% financing: $26,042.30
6% financing: $26,679.27
7% financing: $27,325.65
Total cost of financing by percentage:
2% financing: $1,188.31
3% financing: $1,796.79
4% financing: $2,414.80
5% financing: $3,042.30
6% financing: $3,679.27
7% financing: $4,325.65
Now, depending on the category that you fall into with your credit score, you may find yourself paying quite a lot in financing costs alone but that’s obviously not where it ends. Depending on the model that you land with, gas costs could crush you. Let’s dive a little deeper into that too.
Current price of gas in our area:
Assumed Mileage/year: 15,000
Gas Sucker Vehicle 6.0
MPG: 20miles/gallon (my car…)
15000 divided by 20 = 750 gallons a year
750 x 2.27 (premium gas) = $1,702.50 per year on gas
Gas Sipper 2.0 (Honda Civic HF)
MPG: 40 (estimated)
15000 divided by 40 = 375 gallons a year
375 x 1.67 (regular gas) = $626.25 per year on gas
Difference of: $1,076.25 in cost of fuel/year
With the figures above, we already see how much can be saved between my current vehicle and a vehicle that earns far better gas mileage. In fact, if we assume that I could land a vehicle that has no loan and one that also runs at 40mpg, I could be saving $1,076.25/year in gas alone and let’s not even talk about the $1,188.31 that I’m paying in financing over the five year loan. In addition to this, my insurance payments would be less, my repairs would be less expensive, and I would be less worried about how long it’s taking to get it paid off. Granted, it could be much worse but it could definitely be a whole lot better. I admit all of this because I want to make it clear that I am in no way perfect or unaffected by the daily woes of society that have tricked a lot of us. I’m human and therefore can end up in the same situation as others. The hope is that if I log it as such and post it to my blog, I will further be held accountable when my next chance to buy a car comes up. I’m hoping that I’ll be smarter about my car buying decision and end up in something less flashy, non-financed, more family friendly, and ultimately more reliable over the lifetime of the vehicle. Hopefully this post has also made you think about your own vehicle(s) and how much you could save by making smarter decisions on your next car purchase.
Now it’s your turn:
Do you have an auto loan of your own? How much would you be saving if you switched to a Gas Sipper 2.0 rather than your current vehicle?