So, according to the U.S. News Rankings and Reviews site, Chrysler Improves $2.99 Gas Offer and you may be thinking, “That’s a good thing, right?” Well, let’s see if we can’t shoot a few holes in the financials of such an “offer”.
We’ll start by mentioning that the offer received some criticism when Chrysler first announced it but not for the reasons you might, or perhaps should expect. Environmental groups, whose members often exhibit signs of intelligence, suggested the focus should be on the purchase of more fuel efficient vehicles. Other, amazingly perceptive individuals noted that the cheap gas came at the expense of more lucrative purchase incentives.
But we digress, back to the financials…
So, you’ve been tooling around in the same old 2004 minivan for five years now but at least you paid it off last month. It has served you well but recently it seems a bit jerky during stops and starts. Now that you’ve got the extra $500 a month you used to pay toward the auto loan you figure you’ve got a little cash to spend on repairs. So you take it up to the dealership to have it looked at and while you wait you’re eying the 2009 minivans.
Bad news! Your minivan needs a transmission, and the service manager quotes you $2000-$2500 for a new transmission!!! Bad news travels fast, especially at car dealerships, and it isn’t long before a salesperson saunters over to see why you look so sad. Three hours later you’re ready to ink a deal in which they keep your 2004 minivan, and you drive off the lot with a brand new 2009 minivan for only $550/month for six years after a $2000 incentive, and don’t forget $2.99/gallon gasoline for the next three years!!!
Somewhere in the back of your mind commonsense is having a hissy fit. Its screaming at the top of its lungs, “DON’T DO IT!” but if you listen carefully you’ll then hear it say this, “Keep the old minivan, and for three or four months save the old payment to purchase and install a reconditioned transmission. Then bank the $500 each month (or pay off other debts), pay $20,000 for a quality used van in three years (saving $500/month at 4%) and have an additional $20,000 in cash at what would have been the end of the loan for the 2009 minivan!!!” Didn’t you hear commonsense say that? You should have!
But we forgot the cheap gas!
Eh, not really… By the numbers quoted in the U.S. News report, the average consumer will save $1200 over the course of the three year $2.99/gallon offer. If you heard and acted upon commonsense, you’ll save that in under three months and be driving a quality used minivan within three years! What’s even better is you can repeat the process every three years and upgrade your vehicle every time while paying cash, that is if you’re willing to stay the course for the next three years.
Let’s not forget our friends, the environmentalists!
Indeed, let’s not! So, how is this plan a “green” plan? We suggest that if a sufficient number of consumers would heed commonsense, landfills would fill more slowly as vehicles lifetimes were extended and natural resources would be preserved (and the pollutant by-products of production reduced) as fewer new cars would be manufactured.
So you tell us, is that some offer?!