Month: June 2007

Are Hybrid Cars Good Deals?

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Are Hybrid Cars Good Deals?
Let us compare Toyota Corolla to Toyota Prius.

Hybrids are hot these days. Seems like they come with many benefits. So let us drill down and see if they are good deals.

One of the most famous Hybrids out there in the market these days is Toyota’s Prius. So let us concentrate on it. A model of Toyota that compares well in size, power, look, feel to Prius is Corolla. So let us compare two of them *quantitatively*. Purely in terms of money. Qualitative factors are hard to measure and they are left for blind-lovers or hard-code-haters so they can justify their love or hate for something! So we are concentrating only on the monetary aspect of these two vehicles here.

* Cost of Prius Vs Corolla:

Toyota Corolla is listed at around 15,000USD but you can mostly get if for around 13,500$. Thanks to the competition by Honda Civic, Nissan Centra and hundreds of other similar models.
On the other hand, Prius is listed around 23,000USD for 2007 model. Because hybrids are hot (thanks to tax benefits and high Gasoline prices), it is very difficult to get any discounts. At one point, they were sold at premium to the MSRP!!!

So the price advantage is roughly around 9,500USD.

* Tax Advantage:

Used to be pretty good for Hybrids but it is going to go away completely from October 1, 2007.
Click here for details:
http://www.consumeraffairs.com/news04/2006/09/toyota_tax_credit.html”The tax credit for buying a Toyota hybrid vehicle will begin to fade away October 1. Federal law requires that the tax credit for buying a hybrid vehicle begins to phase out during the second calendar quarter after the quarter in which the company sells its 60,000th hybrid. Toyota reports its cumulative sales of qualified vehicles to retail dealers has reached the 60,000-vehicle limit during the calendar quarter ending June 30, 2006, according to the Internal Revenue Service. Vehicles purchased before Oct. 1, 2006, qualify for the full credit. For Toyota hybrid vehicles bought on or after October 1, 2006, and on or before March 31, 2007, the credit is 50 percent of the otherwise allowable credit amount. Taxpayers buying vehicles on or after April 1, 2007, and on or before September 30, 2007, can only get 25 percent of the credit.

For Prius, credit amounts for April 1, 2007 to September 30, 2007 is $787.50
Beginning October 1, 2007, taxpayers who buy a Toyota hybrid cannot claim the related tax credit.

So after adjusting tax benefit, the net cost difference is 8,500$.

* Gas Mileage MPG

Hybrids are sold on two things: Environment and Savings in Gas. As gas prices go up, Hybrids seem more and more attractive.

Let us do a 2 minute quick analysis:

Toyota Corrola gives 30/38 so assuming 50% street and 50% highway, we get 34 miles per gallon.
For Prius, it gives 60/50 mpg so assuming 50% on street and 50% on Highway, we get around 55 miles per gallon for Prius.

Now let us assume that you drive 1,500 miles per month.(This is on the higher side as normally people drive around 1000 miles per month) If you drive Corrolla, you will need 44 gallons of gas per month and if you were to have Toyota Prius, you can expect to need 27 gallons of gas per month. So the savings is 17 gallons if you are driving 1500 miles per month (and if you are driving 1000 miles on average, the savings is 12 gallons per month)

Let us assume gas price per gallon. If we look at last two years prices, they are around 3$ per gallon. (If you look at last 10 years prices, the average price is I guess 2$ per gallon)

Now we need to make another assumption: How long do you expect your Hybrid or Corolla to last? Let us assume 10 years.

So monthly savings of 17 gallons will be 200 gallons per year so for over the life of the car, we can expect to save 2000 gallons. So if we assume average gas price of 2.5$, we are saving 42$ worth of gas in a month and 5000$ of gas over 10 years in nominal terms. And remember, we have to pay 8500$ upfront for this 5000$ savings over 10 years!!

Now let us assume that we borrowed 8500$ for Prius at 10% per annum. If we were to look at the interest rate/return at 10% per annum on the excess 8,500$ that we are paying upfront, it turns out to be 71$ per year. So you savings in gas of 41$ per month does not even meet the 71$ that you are paying per month for the 8500$! So on the net level, by going hybrid and selecting Prius over Corolla, we are losing 30$ per month and 8500 upfront!!!

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Best hotel deals- how to find them on the internet

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Now a days, it is no secret that best hotel deals are found on the Internet. The Internet gave us an opportunity to bring the world to our home, our desktop.  We can go to http://www.Orbitz.com , http://www.travelocity.com/ or http://www.expedia.com, and there are numerous travel deal search engines and local websites for the area you are looking hotel rooms for our next travel.

Now here is a surprise for you! Get back to the old age- calling the hotel directly! Sounds stupid and old-fashined, right? In the next 2 mintues I will show you what is really the best/optimum way to book hotel rooms for your next trip.

* On the Internet, to get the best deal, you have to go to numerous travel websites to find out who offers the best rates. This takes time, and time is money, isn’t it?
* Also the deals on a specific site keep changing so in order to make sure you are getting the best deal, you have to go to that website (s) on multiple days and at multiple times.
* Plus, talking to a real person is much better than browsing IMHO.

So here is my trick:

  1.  Do a quick 5-minute search on http://www.Orbitz.com , http://www.travelocity.com/ or http://www.expedia.com to select the hotel and the lowest rate you are getting for your target dates. Let us say you found a rate of $129 per night.
  2. Find the the direct phone number of the hotel ( it is vary easy to find it on Google or Yahoo with “Hotel Name, zip code” to find the hotel website).
  3. Call them up and say,”Hi! I am looking for a hotel room in your city and I remember having seen a great price of 89$ for a room on some travel website I guess Expedia.com when I was searching 2 days ago. I am wondering if you can match the price and I would be happy to book my room right now. Your hotel will save the commission to this expedia.com or orbitz or likes, and I would save the hassle of trying to find that price on those websites.”
  4.  Most probably, the hotel’s sales-rep on the other hand will accept your offer. They do have variety of deals in their system that we are mostly unaware of.
  5. If he or she is not able to find that deal, ask him/her, what is the best she can do for you. Most probably, you would be offered the rock-bottom price that you would hardly find yourself on the Internet.
  6. If it didn’t work out, give a call, preferably after 8 hours, so hopefully, you have another friendly person doing this job.

This is my 10 minute secret of booking hotel rooms in matured-internet age! What do you think? Please share your comments, and ideas.

After all, best deals are fun, and make us feel smart! Enjoy.

Thanks for visiting my blog.