Is a Hybrid/fuel efficient car worth it?

In a world of raising gas prices, many have chosen to purchase a new vehicle (potentially a hybrid, but for sure a more fuel efficient car.)

But how do the numbers add up?

For all of our computations, lets assume gas is $4 a gallon.

The average American drives 15,000 miles a year. Unless your car runs on water (that is the ugliest car I have ever seen, I wouldn't drive it even though it runs on water!), your car most likely fits into one of these categories.

For a car averaging 15 mpg, that would add up to 4,000 a year in gas.

For a car averaging 20 mpg, that would add up to 3,000 a year in gas.

For a car averaging 25 mpg, that would add up to 2,400 a year in gas.

For a car averaging 30 mpg, that would add up to 2,000 a year in gas.

So let's say you want to trade in your 5 year old mid sized SUV that gets 15 mpg, for a 2 year old sedan that gets 30 mpg. The trade sounds smart from all angles, especially the pump, but is it? You save only $2,000 in gas per year...but the car cost $10,000 more than your older SUV. So you are looking at five years just to break even. Not to mention, most Americans would finance their new purchase "to save money" on gas prices. Really a couple minutes with a calculator will eliminate "financial savvy" from most car upgrades. These numbers really fall apart when you consider the high cost of the average hybrid. Sit down, crunch the numbers before you pay 12 grand to save money on gas prices.

So is it ever a good idea to purchase a more fuel efficient car? Yes. If it is time (apart from gas prices) for you to buy a new car and you are not acting out of fear, then it would be wise to consider fuel efficiency.