Newsletter - July 2005

WILL A HYBRID SAVE YOU MONEY?

Today it seems like Hybrids are all the rage. They are no longer a quirky two-seater with aerodynamic styling, but mainstream cars with electric and gas motors, and there's a waiting list for many of them. Hybrid sales in the US for 2005 are expected to top 200,000 units, though a small percentage of total sales, the number of units sold doubled over 2004.Toyota and Honda are selling all the hybrids they can make.

The question that remains is will a hybrid save you money in the long run. This depends on a number of factors:

• The current and future price of gas

• What kind of driving is done…city or highway? (Hybrids get better gas mileage in the city)

• What are the tax advantages?

• How long are you going to keep the car?

Gas savings alone takes 8 to 10 years to recoup the price differential but add in the tax advantages especially in Colorado and the payback is much quicker. The federal tax deduction is $2000, so if your effective tax rate is 28%, the savings are $560. However, Colorado gives a tax credit of 75-85% of the difference in price on certain models between the hybrid and comparable model. These are tax credit amounts from Colorado Department of revenue publication INCOME 9 (04/05).

• 2005 Toyota Prius $3434

• 2005 Honda Civic Hybrid $2306 (auto) $2156 (5 sp)

• 2005 Honda Accord Hybrid $2936

• 2005 Ford Escape Hybrid 4WD $3290

(Tax laws change so consult your tax advisor before making any decisions.)

In addition to hybrid technology, hybrids are usually top of the line vehicles that include most options. Using the above figures for the Honda Accord with a price differential of $3915, federal tax savings of $560, Colorado tax credit of $2936 and gas savings of 170 gallons per year (based on combined EPA mileage and 15000 miles per year) at $2.25/gal, the payback period is one year and one month.

TEEN INSURANCE AND DRIVING NEWS

You can wait to add your teenager to your policy until he or she is licensed. In most cases, insurance companies don't require you to add your teenager to your policy until they have their driver's license. The exception may be if you are in a high risk pool; you may then have to add your child when they receive their permit.

Graduated Driver License (GDL) Law

Starting July 1, 2005, Colorado 's GDL law has new restrictions on the number of passengers young drivers can have in their vehicle. Starting on Friday, July 1, drivers under age 18 cannot carry passengers under age 21 until the driver holds a valid driver's license for at least six months. After six months, the driver can have no more than one passenger under age 21 until the driver holds a valid driver's license for at least one year. The exceptions to these provisions of the GDL law are below:

• If your parent or guardian is in the vehicle.

• If there is an adult passenger in the vehicle, 21 years of age or older, who has a valid license and has held a driver license for at least one year.

Another new provision prohibits driving between midnight and 5 a.m. until the driver holds a valid driver's license for at least one year. The following exceptions are allowed:

• If your parent or guardian is in the vehicle.

• If there is an adult passenger in the vehicle, 21 years of age or older, who has a valid license and has held a driver license for at least one year.

• Driving to a school or school-authorized activity and the school does not provide transportation (signed statement from school required).

• Driving to/from work (signed statement from employer required).

• Medical emergency.

• Driver is an emancipated minor.

Visit http://www.coteendriver.com

a Colorado Department of Transportation web site full of useful teen driving information.