Hi Martinfocazio,

I would get the new car. Although from your calculations an additional $1662.11 would be needed in the first year of ownership to finance the new vehicle, it will give you more dependability and reliability (possibly safety as well). Plus you have a new car and by purchasing a car with greater fuel economy you are helping to save the environment as well.

Over here in the UK current petrol prices are £1.05 / litre = $8 / US gallon.

You may want to carry a break even analysis on petrol pricing from year 2008 through year 2013 as follows;

year 2008 - $4
year 2009 - $5
year 2010 - $6
year 2011 - $7
year 2012 - $8

You may find that only in years 2008 and 2009 you are paying more for the new car than the old one. The following years may potentially be saving considerable sums of money to offset the first 2 years. This is of course is assuming that the monthly repayments for the new vehicle are fixed and not variable.

You also will have/should have a more valuable asset with the new vehicle than with the old. It may also be worth while finding out what the initial depreciation of the new vehicle is over the 5 year period and comparing this to the old vehicle.