The conventional wisdom around hybrid cars has been that they will save a significant amount on gas costs during their lifetimes and are better for the environment, but that those benefits come at a cost — a higher initial price that makes a hybrid an overall more expensive option for transportation. But Yahoo Green has an analysis showing this is not the case when all of the various economic factors surrounding a car purchase are considered. In fact, it turns out that buying a hybrid is a better financial move than purchasing a comparable non-hybrid car because of the following reasons:

* Hybrids hold their value better than non-hybrid cars.
* Some lenders — typically credit unions — offer discounted loan rates for hybrids.
* Some insurance companies — including Geico, the Travelers, and Farmers — offer discounted premiums.
* The federal government is also offering tax credits of up to $3,400 for hybrids — but only for the first 60,000 vehicles, which means that Toyota and Honda models are no longer eligible. Some employers offer incentives for hybrid vehicles as well.
* And, of course, hybrids cost much less to fuel up.

In the end, the analysis shows a Honda Accord being 45% more costly and a Honda Civic 16% more costly than a Toyota Prius.
Of course the calculations are highly sensitive to assumptions, but to most reasonable observers, it appears that conventional wisdom has taken another hit.

Rethinking the cost of hybrid cars [Yahoo Green]

— FREE MONEY FINANCE

(Photo: geognerd)

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