Hybrid Car

Does Owning A Hybrid Make Financial Sense?

People buy hybrid automobiles for a number of different reasons. When the vehicles first debuted, a lot of consumers stepped forward to make a statement about the importance of environmental responsibility. Others were enticed by the thought of lower average fuel costs. Still others were drawn to dealership lots for the perks and incentives offered by the government. Today, things have changed a bit.

There are more automakers adding hybrids to their fleets; many of the incentives that were once a major draw are expiring; and there’s less need to make a personal statement about environmental responsibility because the entire country has begun to lean in that direction. With these things in mind, it’s worth exploring whether purchasing a hybrid still makes financial sense.

Are The Incentives Still Available?

Back in 2006, there were myriad incentives for buying this type of vehicle. The most popular were those that involved tax credits. For example, had you purchased a 2006 Civic Hybrid CVT (continuously variable transmission) during that year, you would have received a $2,100 credit on your taxes. Other incentives were largely based on the state and city in which you lived. For example, Miami Beach, Florida offered citizens a 25% discount on parking fees. Pennsylvania exempted registration fees and emissions tests.

Many of these incentives are no longer available. A large number of the tax credits once offered by the government were either phased out over the last few years or have been significantly reduced. All tax credits are scheduled to expire after 2010. From a financial perspective, purchasing a hybrid for the perks and incentives will mostly depend on your city and state.

Reduced Insurance Premiums

Your car insurance rates depend on a variety of factors that insurers use to determine whether you’re likely to file a claim in the future. One of those factors is whether you own a hybrid. Some auto insurance companies offer a discount to their policyholders for owning this type of car. The reason is because they believe such drivers take fewer risks on the road and therefore, are less likely to file a claim.

It’s important to underscore that every insurer uses a different set of criteria to calculate their customers’ premiums. Some companies will give you a discount for driving a hybrid. Others will not. You’ll need to contact your insurer to ask.

The Cost Of Repairs And Ongoing Maintenance

When these vehicles first appeared on dealership lots, there was a substantial level of concern about the cost of repairs. A lot of people were understandably worried that failing parts would be expensive to replace. This is less of a concern today. Most of the top automakers have been producing hybrids for years, which means the prices associated with individual components have declined dramatically. Moreover, these components are typically covered for 100,000 miles.

The hybrid engine requires less maintenance than a traditional gasoline engine. What’s more, the brakes will usually last longer due to the reduced heat created by the regenerative braking system. One important note: you’ll still need to have your gas engine maintained as you normally would in a non-hybrid vehicle.

Lower Fuel Costs

The cost of fuel is an area in which hybrid technology offers a distinct advantage. For example, a vehicle that operates exclusively with a gasoline engine might get 25 MPG while the same model equipped with an electric motor might get 50 MPG. Depending on the average number of miles you drive each month, this might represent a significant savings.

The sticker prices attached to most hybrid vehicles are still higher than those for comparable models equipped only with gasoline engines. So, the decision to buy this type of automobile is still – at least, in part – a financial one. Check with your state for available incentives and ask your auto insurance company whether they offer a discount. If you’re thinking about buying a hybrid vehicle, you may find that it makes financial sense.

Hybrid Cars