Thinkin about tradin you SUV in for a Econobox? Think Again

[fiji06si13]

Found this On Yahoo put it in original form out of respect and rights to Author...
Bankrate.com
Trading in gas guzzler may cost you
Friday May 2, 6:00 am ET

Terry Jackson


Like a lot of people, you may be watching the price at the pump soar and wondering whether it's time to dump your current, less-than-efficient SUV, truck or car.
It's tempting to simply haul your 15 miles-per-gallon vehicle down to the dealership and drive out in something that gets 30 mpg or more. But that may not be smart, at least from a financial point of view.

People thinking of going this route need to take several factors into account.

For starters, your gas guzzler is worth considerably less as a trade-in than it was even six months ago. By some estimates, the value of used sport utility vehicles has dropped more than 20 percent since January.

Even if your current car is paid for, you're likely to incur new monthly payments on that fuel-efficient replacement.

Finally, it could take years to realize actual savings at the pump when other factors are taken into consideration.

Here's an example:

Suppose you have a two-wheel-drive 2001 Ford Expedition XLT. According to Edmunds.com, it is worth about $5,700 as a trade-in and gets about 16 mpg in city driving, although most owners of that model know real-world mileage is less than that.

At $3.70 a gallon for regular fuel, it costs about $97 to fill the Expedition's 26-gallon tank.

To cut that bill, the Expedition owner is looking at a two-wheel-drive 2008 Ford Escape Hybrid, which can likely be bought (assuming reasonable options on board) for about $28,000, plus taxes, title fees, etc.

The Escape Hybrid promises to deliver about 32 mpg in normal driving, double what the 2001 Expedition delivers. A fill-up of the Escape's 15-gallon tank at $3.70 a gallon would cost about $55.

But what are the real savings?

Assuming you own the Expedition free and clear and use the trade-in value as your down payment -- and cover the sales taxes and other fees in cash -- the Escape will come with a loan for about $22,300. At current rates, financing for 60 months means a monthly payment of about $439.

So let's add up the costs for a year:

It costs about $3,500 to keep it filled with gasoline, assuming prices stay at about $3.70. If they go to $4 a gallon, the bill will be about $3,750.

In the new Escape, your annual fuel bill, assuming the same mileage and $3.70 a gallon, would be about $1,730, a savings of about $1,770 a year.

But the new Escape will cost you $5,268 in payments, not counting out-of-pocket fees and the value of the Expedition used at trade-in.

Even after factoring in the one-time federal tax credit that comes with an Escape Hybrid, swapping a serviceable gas-guzzler for a more fuel-efficient new vehicle is unlikely to provide a financial benefit for five years, when the new vehicle is paid off.

Of course, there are reasons to get a more fuel-efficient vehicle the go beyond bottom-line economics. They include concern for the environment and helping to reduce our oil imports.

And if it's simply just time for a new vehicle -- the old one is worn out, or you've budgeted to trade vehicles at this time anyway -- then by all means it would be foolish to not consider something that gets considerably better fuel mileage.

But if your prime motivator is the sticker shock at the gas pump, act with caution. While a new vehicle may help you save at the pump, it can significantly increase your overall costs.

[20strong]

Dang fine post right here people. This seems like commen sense to me, but some people are actually doing it...

[Matt ~]

People REALLY seem to overrate the cost of fuel these days. Yes, it is angering that it has climbed so high and will continue to do so. Live with it, it is the same for everyone. It has come to what? 5-10$ more for a full tank than a few years ago? Yet we see all these people jumping on the hybrid bandwagon when they wouldn't have under normal circumstances. This post makes an excellent point: If you were changing your car anyways, then by all means consider all your options. But in no way is the recent spike worth trading in a slightly used car in for, especially with the market. People think they are geniuses and that they are the only ones who thought of selling their SUVs with the price increase.Think about it, if no one wants them, what makes you think you will sell them in a beneficial way?

[Litlelev]

yes it is using common sense but most people dont have to spend almost $30 grand on a hyrdib suv just to get decent mileage. Id they used a civic instead theyd be savin a ton more dough. Granted its a different vehicle but it really annoys me when i see aeveryone on the road is a huge suv without any passengers. A typical family of four can do just fine in a civic as long as theyre not huge.

[fiji06si13]

Originally Posted by Litlelev

yes it is using common sense but most people dont have to spend almost $30 grand on a hyrdib suv just to get decent mileage. Id they used a civic instead theyd be savin a ton more dough. Granted its a different vehicle but it really annoys me when i see aeveryone on the road is a huge suv without any passengers. A typical family of four can do just fine in a civic as long as theyre not huge.

.......

[kenchan]

here's a quick example that i posted over at nasioc.

on my FitSport 5MT driving aggressively i can get 32mpg...otherwise 36-37mpg.
so if i drove 15000miles (32mpg) and was paying $3.49 for gas i would pay $1,635.
so if i drove 15000miles (32mpg) and paid even $4.29 for gas i would pay $2,010

difference: $375... so $31.25 per month or $1.04 per day (less than a cup of coffee).

here's my legacywgn
so if i drove 15000miles (23mpg) and was paying $3.49 for gas i would pay $2,280.
so if i drove 15000miles (23mpg) and paid even $4.29 for gas i would pay $2800

difference: $520... so $43 per month or $1.44 per day. (about a cup of coffee).

here's my G35C
if i drive maybe 5000miles (22mpg) and paying $3.69 for gas i would pay $800 per year.
i drive maybe 5000miles (22mpg) and paying even $5.00 for gas i would pay $1136 per year.

difference is $336 or $28 per month.

[Cybergypsy]

Great Post......

[volvo9]

The only way to save money would be to sell it for something less expensive. Starting up a new loan on another $20k car isn't going to save sh*t unless you drive like 30k miles a year in a V10 excursion. A lot of people are obcessed with buying brand new cars every 2 -3 years anyways so it's likely that they where going to trade soon anyways.

[Cybergypsy]

i think selling it buy a used 12K insight, might be the ticket have thought of it myself, but love the SLK way too much :)