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Here's a question for the ages: do alternative "green" vehicles, like diesel and hybrids
car actually save you money? The short answer is: it depends.
Let's use one of the oldest green vehicles on the road as an example, the Volkswagen
Jetta automatic sedan. VW has offered both a diesel and regular gas-powered Jetta for
a number of years.
Comparing the two, the Jetta regular gas model gets 26 miles per gallon combined while the
diesel model gets 34 mpg's combined.
Factoring in AAA's average gas prices from December 7, 2011, it costs 12.7 cents a mile
to drive a gas Jetta and 11.6 cents a mile to drive the diesel Jetta. You're saving 1.1
cents per mile driving the diesel model.
It's a slam-dunk on the savings right? Well there's one thing that we didn't factor in.
The diesel model commands a $4,030 premium over the gas model. Assuming you drive the
national average of 13,476 miles a year, it'll take you over 27 years to break even by buying
the diesel Jetta over the gas model.
Now, this number may scare you off, but in fact, hybrids oftentimes also have the same
break-even problem.
The moral of the story is this. First, the payoff for buying a green vehicle can fluctuate
wildly based on fuel prices, fuel economy and price premium. You may think you're saving
money, but the reality may be much different.
Before you buy any green vehicle, you should to run an analysis to calculate your actual
cost savings before you buy, just like we did.
So in two minutes, you got smarter about the actual cost savings of buying a green vehicle.
To do this calculation on your own or for a more detailed analysis on this cost comparison,
visit our website at 2 Minute Finance.com. While you're there, check out our other 2-minute
videos on various personal finance topics.
I'm Bobby Lee for 2 Minute Finance, thanks for watching.