Should I Buy a More Fuel-Efficient Car?

By Maurie Backman Markets Fool.com

Whether you live in a city or deep in suburbia, if you rely on your car on a regular basis, you're probably no stranger to paying up at the pump. Last year, the average American spent roughly $1,400 on gasoline, and that was when prices weren't even at a high.

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While gasoline is only one of the many expenses you'll encounter while owning a car, it's an important one to consider. In fact, you may want to think about replacing your current vehicle for a more fuel-efficient model. Now the downside is that cars offering better gas mileage tend to be more expensive than traditional gas guzzlers, but if you use your vehicle for commuting purposes, you might come out ahead by paying a premium for increased fuel efficiency.

Image source: Getty Images.

Should you upgrade to a fuel-efficient vehicle?

In order to figure out whether buying a more fuel-efficient car makes sense, you'll need to think about your driving needs both now and in the future. If, for example, you commute to work by public transportation and only use your car on weekends, your gas expenditures are probably minimal. On the other hand, if you use your car daily and have a long commute, it pays to see if trading in your current vehicle for one with better gas mileage will save you money in the long run. With that in mind, we have a handy calculator that can help:

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* Calculator is for estimation purposes only, and is not financial planning or advice. As with any tool, it is only as accurate as the assumptions it makes and the data it has, and should not be relied on as a substitute for a financial advisor or a tax professional.

To use this tool, you'll need to estimate how much you spend per gallon of gas on average, how many miles you drive each day, and how many miles per gallon you'll get out of your current vehicle versus a new one. You'll also need to compare the actual cost of your old vehicle with that of a new one.

From there, the calculator will tell you how many months you'll need to drive your new, fuel-efficient vehicle in order to break even. It'll also estimate your fuel savings going forward once you've surpassed your break-even point.

Now the tricky part of using this calculator is that you never know what the future holds, both in terms of your personal fuel consumption and gas prices in general. While you might currently commute, say, 80 miles round-trip each day, what happens if you get a new job that's considerably closer to where you live? Suddenly, your fuel consumption will drop, and with that, so will your potential savings.

Furthermore, while we know what gas prices look like today, there's no telling how they'll fare several years down the line. In recent years, gas prices remained so consistently low that they were blamed for Social Security's absent cost-of-living increase in 2016. If prices stay low, or drop even lower, that could throw off your numbers.

Of course, there's another benefit to getting a more fuel-efficient car, and it has nothing to do with money. Fuel-efficient vehicles are said to be better for the environment, so if you're the earth-loving type, you might consider upgrading for that reason alone.

Another fringe benefit of buying a fuel-efficient car is that depending on where you live, doing so might give you access to your local highway's HOV lanes, even if you don't actually meet the occupancy requirements. In parts of California, where high-volume traffic is practically a given, this perk alone is a good reason to trade up.

One final thing: When crunching your numbers, take your replacement vehicle's estimated mileage per gallon with a proverbial grain of salt. While many fuel-efficient models do offer better gas mileage than traditional vehicles, manufacturers tend to err on the side of exaggeration, and that could throw off your calculation if you aren't careful.

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