## Is it Worth it To Trade in Your SUV?

With gas prices as high as they are, I’m sure many of you are considering selling your SUV and getting a more fuel efficient car as your next vehicle. A lot of people are not very good with math, so I am going to go through the calculations with you to help you figure out if it is worth it to trade in your old SUV for a more fuel efficient car. I won’t just throw out a bunch of formula’s because I know they can be tricky to follow, instead I will set up a hypothetical situation with real numbers and let you guys follow along. Hopefully you will be able to calculate your specific situation after reading this article.

**Q. I have an 8 year old SUV that gets 14 mpg and am looking to trade it in for a car that gets 32 mpg and costs $25,000. I drive about 15,000 miles per year and this $4 gas is really starting to get too expensive for me. Is it worth it for me to trade in my SUV for a car or should I hold on to my SUV a little while longer?**

**A.** Your SUV is pretty old so besides gas consumption, you will have to factor in maintenance costs to figure out which one of these options will be cheaper for you. But first we will calculate how much you will save on gas with the new car vs the SUV.

15,000 divided by 14 mpg equals 1071 gallons multiplied by $4 per gallon costs you $4,286 in gas for the SUV every year.

15,000 divided by 32 mpg equals 469 gallons multiplied by $4 per gallon costs you $1875 in gas for the car every year.

For this example the savings will be $2,411 every year. Now we need to factor in the cost of maintenance for the SUV.

Maintenance for the new car should be free because it should still be under warranty. A rough estimate for maintenance on the SUV would be $2,500. This bring ups the cost of keeping the SUV up to $4,911 or $409.25 per month.

So $409.25 is the magic number that you can afford to pay every month for the new car. You would be trading in your SUV so that would lower the price of the new car. Go to kbb.com to check out how much your SUV is currently worth. Next deduct this from the price of the new car.

Now you need to figure out how much it would cost to finance this new car after you get the money from trading it in. We will assume you got $9,000 back so your purchase price on the new car will be $16,000.

If you have good credit, then you probably qualify for the 0% interest loans from the car dealers over a five year loan. I just googled car finance calculator and came up with this nifty little program. It says that you monthly payment would be $267.

**This means that if you were to sell your SUV and buy a new car, you would save $142 every month.** Sounds like a good time to buy to me. Don’t forget that you will be driving around in a brand new car and not some 8 year old SUV.

If you enjoyed this article don’t forget to subscribe to my RSS feed so you can get my posts daily. Also **stumble it** or submit via your other favorite bookmarking sites so others can enjoy it as well.

Spreadsheet: New Car Cost vs Old Car Cost, Version 1.0 | FinancialRamblings.com~ Jun 4, 2008 at 2:20 pm[...] Is it Worth it To Trade in Your SUV? – davidmakessense.com [...]