Should I go in debt on a car to save in gas costs?
I’m trying to figure out what route I should go that makes the most financial sense. My commute to work is 120 miles per day (let’s assume this can’t change). My current car, a Taurus (24 mpg) is killing me in gas costs. I’m trying to decide if it would ever make financial sense to go into debt to buy a car when gas savings comes into play. For instance, I could buy a Saturn (40 mpg) for $5k and save $160/month in gas. I could get a diesel Jetta (50 mpg) for $10k and save $250/month. I can’t figure out if the name of the game is monthly cash flow, initial investment, ROI, long-term net, etc. Is this equivalent to investing for a 25% return (or does depreciation kill that)? And if the Taurus only has a few years left, am I better off making this decision now or when it dies? I could get $2k for the Taurus now, but not in a few years. From a money standpoint, I can’t figure out what angle I’m supposed to look at this.
First…sell now and get your 2 grand.
Second…take the money and a 3 grand loan and get the Saturn simply because 10K will not work financially and the Jetta will be more expensive if something were to happen.
Here’s the idea…
A 3 grand car loan even at 10% is only about 96.80 per month. But!…you are saving 160 a month in gas and thus profiting about 64.20 per month in overall expenses.
Good luck!
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