Does it pay to think small?

September 16, 2008 -- Filed under Saving money by Normand Miron

Well, the quarrel is underway at consumerreports.org! Following an article on the phenomenon of “downsizing” (moving to a smaller car model to save on fuel consumption, among other things), the fight is on about what is the best way to calculate whether or not it is financially beneficial to opt for smaller. In fact, the question works at two levels.

First of all, the writer pointed out that sometimes it may not be financially advantageous to go from his current car to a smaller one, even if the latter consumes less fuel. The reason? The “hidden” costs related to the depreciation of the current vehicle and the interest associated with its purchase or lease which can exceed the actual savings in the smaller car’s fuel consumption – and obviously the cost of acquiring it.

To make a long story short, before the quarrel begins here as well, the longer you have your vehicle (in fact, the closer your monthly payments are to reaching their end) and the older it is, the greater the potential savings. The writer suggests that we think “3 years or more” before selling.

But on second look, the environmental costs associated with consuming more fuel must be considered too. Some people also consider that reducing their own carbon footprint as much as possible will justify the additional costs related to such a transaction.

So, to each their own calculations. And what do you think? Let’s talk about it!

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