The following is a post by MPFJ staff writer, Derek Sall. Derek is the owner of the blog, LifeAndMyFinances.com, where he teaches people how to get out of debt, save money, and become wealthy.
Hybrids first went mainstream with the introduction of the Toyota Prius that boasted an impressive fuel efficiency of 42 miles per gallon in the city and 41 mpgs on the highway. Compared to the typical average of well below 30mpgs, this car was simply amazing. It was quiet, high tech, surprisingly spacious, and had some decent power considering its efficiency. Obviously, this car would save money in gas, but were there additional costs associated with the hybrid that few car-buyers would notice before the purchase? As with most purchases, unfortunately yes, there are costs that may hurt your ability to save money in the long run.
1) The Higher Initial Costs
When purchasing a newer model, many dealers like to talk in term of payments, rather than the actual total that the car is selling for. Often, this is because they do not want their customers to experience sticker shock. It’s much easier to wrap your head around a $300 a month payment than it is to spend a total of $28,000. Also, to make the costs between gasoline-powered vehicles and hybrids seem negligible, they can extend the time frame of payments on the hybrid so that the per-month price is basically the same.
In reality though, the sticker price on the hybrid model is often much more expensive than the non-hybrid – typically $2,500-$5,000 more expensive. So immediately you are starting in the hole by purchasing a hybrid vehicle, just hoping that you can make up the difference in fuel savings.
2) Variable Fuel Prices
One of the biggest selling factors for hybrid vehicles in 2013 and much of 2014 was the steep cost of gas. If you typically spent $2,000 a year at the pump, purchasing a hybrid could immediately save you $750 a year, which would cover the initial purchase costs in just five years!
However, at the surprise to many, gas prices actually started going down in the fall of 2014 and they still remain relatively low today. With these reduced running costs, the break-even time frame extends beyond the five-year mark and is now more like eight or nine years! It becomes a little more difficult to justify a purchase when it won’t start saving you money until a decade after the purchase.
Source: GasBuddy.com
3) Highway Trips
The people that are typically the most interested in hybrid vehicles are the ones that travel great distances to work. It certainly makes sense that they would be looking for better fuel efficiency with the miles that they’re racking up each year, but the only problem is that the hybrid vehicle isn’t really built to save as much fuel with long highway trips. In actuality, the hybrid actually gets better fuel efficiency with more starts and stops in the city (which is why they often boast a higher city efficiency rating). And on the flip side, gasoline-powered vehicles often get better gas mileage on the highway, so the divide between the gas mileage of the hybrid vs. the gasoline model isn’t that great.
As an example, let’s compare my 2001 Honda Civic to the 2000 Toyota Prius. My Honda gets 27mpg city, and 34 mpg highway. As we stated before, the Prius gets 42mpg city and 41mpg highway. If I drive mostly long distances, then I’m likely taking the highway almost everywhere I go, and the fuel efficiency is only a slight amount better than my non-hybrid vehicle, so the savings is even less than you might initially think.
4) The Cost of the Battery
Hybrid vehicles have a specially made battery that is powerful enough to power the entire car for periods of time. This amount of power is impressive, but it doesn’t come without a hefty price tag. If a hybrid car needs a battery replacement, it can often cost between $1,000 and $6,000 dollars. Yikes! If your car is eight years old at this point, then it might not even be worth the amount of the replacement!
Because people are scared of this cost, used hybrid vehicles can often be more difficult to sell. So, even if your battery doesn’t fail, you will still be eating some of the cost because you’ll have to sell the car for cheaper than a run-of-the-mill gas-powered model.
Before your next car purchase, be sure to review the hidden costs!
How about you all? What hidden costs did you encounter when purchasing your last car (regardless of what kind it was)?
Share your experiences by commenting below!
