The Hybrid Frontier

Photo by: jurvetson

The first electric cars and hybrids were miserable. Many required the driver to plug the car in, which actually used more energy in the long run than a traditional combustible energy engine. Plus they were notoriously unreliable and needed frequent repairs on expensive, hard-to-find parts.

While the hybrid has evolved to become a more reliable option, it's not a no-brainer purchase. The buyer should consider fuel costs, expensive hybrid repairs, and travel needs first. Before dipping into your savings account, gauge your transit needs and current situation first.

• You own a paid-off car
  Good for you! Contrary to group think, transportation will always be an expense, not an investment. If you're driving without a car payment, that is the most economical way to live. Continue making "payments" to your savings account so that you can buy your next vehicle outright, avoiding interest. You are in the best position to take advantage of long-term gas savings a hybrid offers.
  
  Best bet: After your current ride expires, spend a bit more to purchase a hybrid. Since you're the type of driver who will run a car into the ground, you'll start saving on the extra up-front costs after about five years.
• You have car payments and plan to keep it after paying it off
  Aim to pay off your existing ride within the next year to avoid interest. If you can't afford to do that, sell it and buy a clunker with the difference. Never forget that a car is an expense, not an investment. If you pay $17,000 for a 60 month 8% interest car loan you'll pay $3,682 extra for financing. Unless you buy a classic car, the vehicle will always depreciate in price.
  
  Best bet: Buy a hybrid after your current car won't run anymore and pay for the bulk of it in cash.
• You buy or lease a new car every couple of years
  If you car hop, count yourself completely unfrugal. Those who truly want to save money will drive a clunker, e.g. something you can afford to buy outright, rather than a car you can't afford. While leasing has a cheaper price tag than traditional payments, most deals have mileage restrictions and end-of-term balloon payments. Most people who lease don't intend to invest the difference elsewhere for a greater return on the money.
  
  Best bet: Unless you change the way you use transportation, owning a hybrid will only cost you more.

Perhaps the best mode of transportation for your budget is a used, small, fuel efficient car. The current high cost of hybrids, especially the midsize or SUV, doesn't honestly warrant a decent tradeoff. Reducing your need for fuel is great, but you don't have to pay for it.

Next: Transportation a Go-Go