With gas priced up to and sometimes over $4.00 a gallon this is a common question. The quest for better fuel economy has led many people to the showroom to look at the newest technologies, including hybrids. Many car companies are selling hybrid vehicles at this point, some are different some are not. While the details of the hybrids is important and interesting, that is not the scope of this post.

The question is when and why should you buy a hybrid versus a conventional vehicle. There are several reasons why car buyers choose hybrids. They include saving money on gas, making a political or environmental statement, for status, the reasons go on. The common belief is that driving a hybrid will save money. Unfortunately, this is rarely the case. Hybrid vehicles cost a considerable amount more than their conventional counterparts. So it is important to look at your driving habits. Consider the number of miles you drive in an average month. Then look at the mileage rating of the hybrid versus any other vehicle you are looking for. If you divide your total monthly mileage by the mpg ratings of each car you are considering. This will give you an estimate of the number of gallons each car will consume on a monthly basis.

With this info take the difference in gallons and multiply that by the prevailing gas price. This number represents your monthly gas savings. Now look at the difference in the monthly payment between the two cars. If the savings on gas is larger than the payment difference then you will be saving money. Make sure to take into account any down payment or trade in you have. If you are paying cash for the vehicle take the overall cost difference and divide it by the estimated gas savings, this will tell you how many months it will take for you to break even on the added cost.

This will give you a true picture on whether buying a hybrid makes financial sense or not. In future posts we will talk about the other reasons to buy a hybrid.