Monday, April 6, 2015

Why Are We Still Buying Inefficient Vehicles?

You see them on the road all the time- one little person all by themselves, driving a great big land yacht, and we wonder to ourselves as they rumble past, how can they keep gas in a vehicle that big? Are they refining crude oil in their back yard? 

The answer, obviously, is no. There’s a “thing” in the economy right now that makes people feel as though these big, inefficient vehicles are still relatively affordable. Now, that being said, if someone is driving around their paid-off mid-nineties Ford Excursion with 375,000 miles, then the $100 they’re putting into the tank isn’t that big a deal. In fact, it can and has been argued that it’s a bigger waste of money to buy a new, more fuel efficient vehicle every time manufacturers squeeze an extra 10% fuel economy out of an engine than it would be to just hold on to a big, gas-guzzling V8 monster. It’s better for the environment, as well, as counter-intuitive as that tends to be.

So, why are big cars still a thing? The easiest answer is that less efficient vehicles tend to be cheaper for the most part, but it also has to do with gas prices. Sure, they go up, but when they do, they tend to go up slowly. When they drop, however, it’s usually a precipitous drop. Recently, gas prices have been low, and they’ve stayed on the low side. It’s safe to say that there are more than a few consumers out there who have taken the lower prices to heart, and planned their next vehicle purchase accordingly. As extraordinarily unwise as this is, it does go to the heart of our national propensity to think big and think best.

So, we know that it’s a thing that we buy big vehicles when gas prices are a bit lower than average. The question that we need to ask ourselves is whether or not that vehicle makes sense. After all, it’s just a car, right? Here’s a quick guide that might just give you an indication that that big ‘ol truck you’ve been eyeballing may not be the best option for your family.

First up, what exactly are you using the vehicle for? If it’s daily commuting and towing a boat twice per year, you might want to think twice. On the other hand, if you’re retired and spending the year pulling an RV from coast to coast, a small sedan or small truck simply isn’t going to cut it. Try to break down how much time you’re going to spend doing various tasks with the vehicle, and figure out what the largest use will be. If it’s evenly spread out, you might have a tough time, but I’d be willing to bet that you predominantly use a vehicle for one thing or another, and very seldom much more than that.

Next, what’s the overall cost of the vehicle compared to your income? If you’re spending more than half your yearly salary on a vehicle, you’re doing it wrong. If that vehicle eats up hundreds of dollars of your monthly income in gas, you’re crazy. Simple as that. Just before you sign the papers for the car loan, take a deep breath and a walk. Think about why you’re buying the car. Is it because your neighbor just bought something similar and you want to keep up appearances? Is it because you came into a windfall of cash and feel like you can afford to spoil yourself? Think carefully, and you might just realize that buying that inefficient car or truck, even with lottery winnings an inheritance, or savings, could leave you high and dry later on when gas prices go up, repair bills kick in, and the insurance man takes his cut.