I'm saving a lot on gas...but my loan payments are a lot higher than they would be for a normal economy car; non hybrid. Prius?

The state of Colorado already has a calculation for the incremental cost increase of the hybrid system in the Camry as compared to a non- hybrid (data provided by the Toyota regional distributor). This incremental amount is used to calculate the state of Colorado Alternate Fuel income tax credit.

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incremental price difference in Colorado for a Hybrid Camrycompared to a similar non-hybrid Camry is $2,665.

Reply to
mrv
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So, this state's generous tax credit, which is only short $400 from covering the whole difference, combined with the Federal tax credit, if your purchase came under the wire, reflects a hybrid purchase costing less than the conventional counterpart. If you live or work in Colorado what a sweet deal!

Connecticut's state sales tax is waved if the hybrid is registered there. The rate is 8 1/2% on the difference between the cost of the vehicle minus trade-in if any.

For the disgruntled who believe there shouldn't be tax breaks, I bet they still enjoyed writing off some or all the costs incurred for making their homes more energy efficient. I'll only listen and sympathize with true die-hards who live in cold drafty houses ;)

mark_

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Reply to
mark digital©

What you say is true on the first day, but nobody buys a thousand gallons on the first day. So, if the thousand gallons are broken down to 20 gallons at a time, then the calculation for the return on investment is spread over a longer time period. Now, I did oversimplify the discussion earlier, but the details don't change the calculations very much. I'd agree that the net affect is that as gas prices go up, the return on investment might become shorter. Does it really matter if the ROI comes at 200k or 190k miles? I don't think so.

If a car can go 400 miles on 20 gallons at $1.50 or $3.00 then the cost per mile is $0.075 or $0.15 per mile. If the car can go 800 miles on the same 20 gallons then the cost per mile is $0.0375 or $0.075, respectively. So, depending on the price of gas, the difference in cost per mile is roughly a nickle. It takes lots of nickles to cover a premium of $4,000. I just did these numbers in my head, and the pay back comes at 80,000 miles, but I've run the numbers before and come up with a number that's more like 200k miles -- which is the same kind of number the experts also come up with.

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Reply to
Jeff Strickland

That was what the experts were saying in 2002, when we bought our first one. Gas was $1.50 per gallon. I think you got the numbers right when you ran them: $4000 x 20 nickles/dollar x 1 mile/nickle [difference] = 80,000 miles.

80,000 *is* a lot of nickles but not a whole lot of miles. The doubling in cost of the gasoline halved the payback period. If you re-run it with some really ludicrous price, you'll see the relationship is proportional

As you point out, the details of amortizing the gasoline savings vs. the interest paid on the hybrid premium blurs the picture a bit. I'm pretty sure the numbers stay in the ballpark though. I'd need more sleep to run that!

Mike

Reply to
Michael Pardee

The hybrid will last an estimated 200,000 miles with only an estimated reduction in fuel efficiency of 2% without major surgery. Without any tax break considerations let's say brand new cost is $24,000. 24,000 / 200,000 12 cents a mile. The non-hybrid will last an estimated 120,000 miles and for argument sake will only lose 2% without major surgery. Initial cost $20,000.

20,000 / 120,000 = 16.6 or 17 cents a mile.

If both owners like to trade their vehicles in at 50,000 miles, subtract vehicle depreciation at that point. 50,000 X 17 cents per mile = $8500 for the non-hybrid and 50,000 X 12 cents per mile = $6000. $20,000 - $8500 $11,500 what the non-hybrid is worth. $24,000 - $6000 = $18,000 what the hybrid is worth. Hybrid owner buys another one and forks over $6000 plus trade. Non-hybrid owner buys another one and forks over $8500 plus trade. Sales tax of 5% on $8500 = $425. Sales tax of 5% on $6000 = $300. Fuel cost for non-hybrid traded in at 50,000 = (50,000 / 30 mpg @ 2.00 per gallon) $3333. Fuel cost for hybrid traded in at 50,000 = (50,000 / 40 mpg @ 2.00 per gallon) $2500. Hybrid owner spent $833 less for same distance traveled, spent $125 less on sales tax on the new second vehicle, and loss $2500 less at trade-in time. $2500 + $125 + $833 = $3458. A loan on $4000 more than the non-hybrid averages $458 when an average of interest rates and average of duration are taken into account. The end result is eerily similar to the first federal tax break

Reply to
mark digital©

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