7 Ways My Clunker Is Smarter than a Hybrid | Wise Bread

I’ve always been slightly amazed how the new car market is so readily embraced. I know it takes all those new car buyers to allow us used-car shoppers the luxury of so much inventory. I just want to stay in the ranks of the latter, not the former.

Most people realize buying new often makes little financial sense, yet they justify it through a whole host of rationalizations. Even the federal government jumped on the bandwagon last year by suggesting we all needed to grind up our clunkers and buy new instead — for the sake of the national economy and the environment, no less. Was the result a whole fleet of new fuel-efficient cars on the road, or increased consumer debt and the loss of thousands of serviceable older vehicles? At the risk of sounding like I suffer from an acute case of sour-grapes, I’d like to explore just seven ways in which my old clunker may be a smarter choice than even the newest hybrid.

1. Fuel efficiency isn’t always green

By some estimates, more than 25% of a car’s carbon dioxide emissions come from the manufacturing process (this can include design, testing, building, marketing and shipping). Since my used car has already gone through the manufacture and transport phase, it produces no new demand for automobiles and therefore, no additional environmental demand. Even though it only gets 22 miles per gallon on a good day, driving it responsibly arguably produces less pollution than purchasing new. If going green is truly driving (pun intended) your purchase, this consideration should give you pause.

2. Steep depreciation

Though the jury is out on the long-term depreciation rates of hybrids, most new cars lose as much as 20% the minute you wave goodbye to the dealer. Where else can you lose $0.20 on every dollar with just a signature and a click of a belt buckle? If you aren’t paying for the car outright, add finance charges to the mix and remember, all this delightful financial devastation is occurring to after-tax dollars — dollars that won’t be around to invest. That’s four major hits for every buck spent: one hit from the tax man (payroll tax and sales tax), one hit from depreciation, one hit from the finance company and one last blow from the loss of earning power of each dollar tied up in your new purchase.

3. Premium rates

Even if you’re paying for comprehensive insurance on a used car now, premiums go up for later-model automobiles. Hybrids are no exception; more complex engine systems and batteries mean higher repair costs and higher insurance rates. Of course, full coverage is mandatory if you have a car loan — the bank wants to protect its investment. But used cars that are paid-off can be covered by liability insurance only (based upon comprehensive insurance costs vs. auto replacement cost calculations). Being able to control your insurance costs can make driving used even more fiscally prudent.

4. Higher registration costs

The fees and formulas vary from state to state, but typically, licensing and registration costs are directly related to the value of your car. Much like insurance, higher car values equal higher rates.

5. Higher repair costs and repair standards

If you’ve ever bought a new car only to get a scratch or windshield chip a few weeks later, you know that newer cars compel us toward a higher standard of perfection. People are more likely to keep a new car as pristine as possible for as long as possible, and those little touch-ups and repairs tend to cost more too. My old Volvo has a door ding, some weird stain on the hood and the plastic trim is bleaching out. Besides a compulsive cleaning and wax-job every few months to make it shine, I live with these road wounds happily.

6. The phenomenon of “incestuous affirmation”

This is really just a fancy term for keeping up with the Joneses. It suggests that any major new purchase sets in motion a whole slew of buying activity within a close network of people (friends, coworkers, family, etc.) by affirming the behavior of one member. This ripple effect is felt from the least capable of affording new to the most capable and creates a slight uptick in unspoken standards within the group.

7. New peripheral expenses

From add-ons to upgrades, new cars increase standards and raise monetary output. Of course your baby needs premium gas, a hand-buffing each week and a GPS system. And what about that monthly fee for satellite radio now that first year of free service has expired?

Now, many of these same principles can be applied to any purchase where there’s a reasonable choice between new and used. But our nation has such a love affair with the automobile and such a cultural acceptance of the resulting debt that it begs a bit of special exploration. What are the new economic realities that make buying new less attractive? Are we really in the same position our parents were when they traded up every few years? How do car companies entice us with nickels before the purchase only to damn us with dollars afterward?

Granted, none of the points above explore the amazing safety advancements that some new cars feature. I would never put a price personal safety or begrudge a car purchase with this as the primary motivator. But with such a wide range of later model used cars available, it doesn’t have to be an either/or proposition. All else being equal, each blemish and bump on my used car is masked by the dollar signs I see behind them — the dollars I save by keeping it in good working order and running smart for as long as possible.

This is a guest post by Kentin Waits. Kentin has worked in web marketing for 13 years and run his own eBay business for 10. In 2009 he published two articles for Backwoods Home Magazine and is currently working on a page-a-day desk calendar on the topic of financial empowerment.

Posted via web from AndyWergedal