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Buying & Leasing a Car

Hybrids Worth the Price

From a dollars-and-cents perspective, the decision to buy a hybrid is never simple.

When Kiplinger's looked at the costs versus benefits of buying a hybrid two years ago, we concluded that most drivers would see long-term savings only with the smallest, most fuel-efficient models -- namely, the Toyota Prius and Honda Civic Hybrid.

But at that time, gas cost only $2.30 a gallon. Now that gas prices have hit the stratosphere, more hybrids make financial sense. But with some hybrid models, you won't even come close to getting back the premium you pay.

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To reach that conclusion, we compared the five-year ownership costs of 13 hybrids with those of their gas-engine counterparts. Our math is based on actual transactions, rather than sticker prices, and assumes a 15% down payment, a five-year loan and 15,000 miles of driving a year -- 55% of those at city speeds. Vincentric supplied the data.

Besides sucking less gas, many hybrids save on taxes and fees because they qualify for a one-time tax credit, which we took into account. A factor that we couldn't include is a potential discount on your car insurance. Travelers, for example, offers a 10% discount for hybrids in most states.

Best and worst. At the top of the list for value is the 2008 Saturn Vue Hybrid, which is projected to cost $2,500 less over five years than the gas-engine Vue XE. The numbers also favor the Nissan Altima Hybrid ($2,100 less than the Altima S), the Lexus RX 400h ($1,100 less than the RX 350) and the Honda Civic Hybrid ($1,000 less than the Civic EX). The Altima Hybrid is sold in only eight states -- California, Connecticut, Maine, Massachusetts, New Jersey, New York, Rhode Island and Vermont.

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It's tough to justify buying a car at the bottom of the list. The Lexus LS 600h L costs $35,000 more in total costs than the LS 460 L, mainly because of its $32,000-higher sticker price. The Lexus GS 450h costs $16,900 more than the GS 350, and the Chevrolet Tahoe Hybrid costs $10,700 more than the Tahoe LT.

The middle group of hybrids has ownership costs that run from slightly to significantly higher. The Ford Escape Hybrid costs $200 more over five years than the Escape XLT four-cylinder; the Chevrolet Malibu Hybrid costs $400 more than the Malibu LT; and the Saturn Aura Hybrid costs $1,700 more than the Aura XE.

The Toyota Highlander Hybrid (which has four-wheel drive) will cost $2,200 more to drive than the Highlander base four-wheel-drive model; the Toyota Camry Hybrid will set you back $2,700 compared with the Camry LE.

You could still come out ahead with these in-between hybrids if gasoline prices rise. For example, with the Ford Escape Hybrid, you'd erase the price premium if gas were to average $4.50 a gallon.

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What about the Toyota Prius? For many Americans, the white-hot hybrid symbolizes green driving. Many dealers have months-long waiting lists and are charging $1,000 to $1,500 more than the $23,135 sticker.

Compared with what? Even so, if you look at the total ownership cost over five years, the Toyota Prius ties the Honda Civic Hybrid for least expensive ($39,780). The Nissan Altima Hybrid ($40,730) is next cheapest, followed by the Chevy Malibu ($44,810), Toyota Camry ($45,140), Ford Escape ($45,860) and Saturn Vue ($46,120) hybrids.

But hybrids aren't the cheapest rides. A number of nonhybrid gas sippers cost less to own over five years. One of the best values is the Honda Fit, which costs $35,650 to operate over five years. The Nissan Versa costs $36,520. If you want more room, consider the Toyota Matrix, which is projected to cost $39,680 over five years.

From Kiplinger's Personal Finance magazine, October 2008

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