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July 10, 2015

Are Hybrids Worth the Extra Money?

Simple. Thrifty. Living.

If you’re in the market for a new car, you’ve probably noticed that almost every major automaker now offers a hybrid option. These vehicles save money on gasoline, but they also come with a higher price tag. Due to expensive batteries and complex engineering, hybrids cost 15 percent to 20 percent more than traditional cars. Are they worth the extra cash? Here’s an overview to help you balance the costs and benefits of this new technology.

Hybrid cars combine a gasoline engine with an electric motor. Their gas engine is smaller and more fuel efficient than that of a regular car, because the electric motor kicks in extra power for passing, hill-climbing, and so on. When you brake, extra energy from the wheels’ momentum is used to recharge the electric motor (hybrids don’t plug in or require any outside electricity). In slow traffic, the hybrid can run on electricity alone, further reducing your gas consumption.

Essentially, your hybrid saves you money by reducing the amount of gas you have to buy over the car’s lifetime. Hybrid technology can add up to $7,000 to the price of a car, while fuel savings range from 6-15 miles per gallon. Therefore, a hybrid that raises the cost by $7,000 while providing only an extra 6 miles per gallon overall would have to be driven about 225,000 miles in order to make the investment worthwhile (if gas is $3.50 per gallon). On the other hand, a model that offers a free hybrid option and a 14 mpg increase in fuel efficiency will begin saving you money as soon as you drive it off the dealer’s lot. Also, a hybrid makes less difference in your budget as fuel prices drop, because the cost of driving a regular car is lower when gas is cheaper.

Another important factor to take into account is the cost of your insurance premium. Take a look at multiple insurance providers on compare.com. This site shows multiple offers at once and allows you to pick and chose the right company for you based on price and policy.

The U.S. Department of Energy offers a very useful website that provides all the information you need. When you select the hybrid model you’re interested in, the site compares that model with the most similar traditional model, balances the suggested retail price for both cars with the current price of gasoline, and tells you how long it will be before your gas savings will outstrip the extra that you’d pay for the hybrid. This website also takes into account your local price of gas as well as the extra interest you’d pay if you finance the additional hybrid cost.

In addition, you can check the Edmunds.com site to compare and contrast the right car for you.

Depending on your driving habits (and the price you get from your dealer), a hybrid may be an economical choice. However, savings are clearly not guaranteed, so it’s important to do your homework before buying.

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