Monday, June 30, 2008

Swedish Economics 101


When I return to work this Thursday, I will have completed my first month as a salesman at Leikin Volvo. With that amount of time under my belt I am offered the distinguished privilege of driving a demo car for a small monthly "rental" fee. I intend to take advantage of this deal during the winter months since the heater in the XJ-S doesn't work. But I have been wondering whether it would be a good idea all year round.

My wife and I initially agreed that "renting" a demo car would not be cost-effective at this time as the Jaguar is already paid off. However, things are a bit more complicated than that. The Volvo would probably provide better gas mileage, not require repairs, and not require insurance, but it would require a monthly "rental" fee. The Jaguar doesn't get good gas mileage, does require insurance, and will require periodic maintenance, but I happily don't owe anything on the Jaguar. Which then is the better deal?

VOLVO DEMO

JAGUAR XJ-S

INSURANCE

$0.00

$18.42

REPAIRS

$0.00

$50.00

MILES

750

750

MPG

20

15

GALLONS

37.5

50.0

$ / GAL

$4.19

$4.19

FUEL

$157.13

$209.50

TOTAL COST

$157.13

$277.92

I've chosen not to reveal the "rental" fee as it is not a public matter. But you can see with these totals that I could afford to pay up to $120 per month at the current figures and not change our financial situation at all. Hmm...

2 comments:

Anonymous said...

That 20 MPG figure for the Volvo seems a bit conservative. You didn't reveal the model, but I averaged around 25 in my S60 2.5T AWD.

Andy Rupert said...

That's a good point to make. At the time I didn't know what model I would get. Since then, I've been given a 2007 S40 2.4i which will do quite well, I'm sure.