Trading in your Truck?? Think again!!

**bbomar** · 05-11-2008, 11:29 AM

News artical about the cost effectiveness of trading it in.

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.

**Blackbeauty** · 05-11-2008, 11:43 AM

Nice post, bbome! We've all thought about this recently, but seeing it all collected together may bring this home for many people.

TitanBlue · 05-11-2008, 12:15 PM

If I want to save money, I need to get a 150cc Scooter and a Motorcycle License. That would pay back in about 18 months, if I don't end up in the hospital from an accident. No 5 Star Crash rating with thse things.

supertitan · 05-11-2008, 01:14 PM

Well I Didnt Do The Trade, But Did Get A Loaded Suzuki Sx4 Sport

supertitan · 05-11-2008, 01:17 PM

The Three Hundred To 350 Amonth On Gas I Can Buy A Sub-compact With Better Gas Miliage.

helomech · 05-11-2008, 01:36 PM

Quote:

Originally Posted by supertitan

The Three Hundred To 350 Amonth On Gas I Can Buy A Sub-compact With Better Gas Miliage.

Yes you can, but then you need to fiqure in the extra insurance, and you still need to fill up the gas saver, the maintance, and a host of other things. I was spending over 600 a month on gas, so I bought a used saturn for 4k cash. Now I spend 200 a month on gas a savings of 400. My insurance actually went down, because I switched from state farm to farmers, and was able to double my insurance. Tires are alot cheaper for the saturn, and 4 quarts of oil is cheaper than 7. I was able to come out ahead, but that isn't always the case.

jljue · 05-11-2008, 07:01 PM

I know many people who are looking to sell their trucks, and can't get any takers. Dealers don't want to keep the vehicles on their lots, so they aren't willing to offer so much for trade-ins. For most people, they just need to suck it up and go with the flow the best they can. For others, it might make better sense economically to buy a small USED car for the fuel economy car and keep the truck since you are going to get taken to the cleaners for trade.

miketan · 05-12-2008, 02:27 AM

Quote:

Originally Posted by jljue

I know many people who are looking to sell their trucks, and can't get any takers. Dealers don't want to keep the vehicles on their lots, so they aren't willing to offer so much for trade-ins. For most people, they just need to suck it up and go with the flow the best they can. For others, it might make better sense economically to buy a small USED car for the fuel economy car and keep the truck since you are going to get taken to the cleaners for trade.

Exactly! Buy a small used car. Why buy a new expensive fuel efficient vehicle and then take a huge loss trading a gas guzzler in for it? Financially, it doesn't make sense. Keep the SUV/truck for weekend warrior duties and use the MPG car to run errands/go to work. There's a ton of used fuel efficient cars out there in the market. Or, if you don't mind taking public transit, ride the bus occasionally a few times a month to cut fuel costs. I'd ride the bus before I had to trade in the Titan.lol!

**roy365** · 05-12-2008, 05:13 AM

Didn't trade the truck in......but i did trade my motorcycle in that could have killed me. I am the proud new owner of 2005 Honda S2000. It costs me $35-37 bucks to fill up on PREMIUM fuel and goes the same distance as my Titan does on $85-95 bucks. It's a no brainer to me. The car payment is covered by the fuel savings.

helomech · 05-12-2008, 06:05 AM

Quote:

Originally Posted by miketan

Exactly! Buy a small used car. Why buy a new expensive fuel efficient vehicle and then take a huge loss trading a gas guzzler in for it? Financially, it doesn't make sense. Keep the SUV/truck for weekend warrior duties and use the MPG car to run errands/go to work. There's a ton of used fuel efficient cars out there in the market. Or, if you don't mind taking public transit, ride the bus occasionally a few times a month to cut fuel costs. I'd ride the bus before I had to trade in the Titan.lol!

Don't have any public transportation available. But I have already done exactly what you said, it has helped me a lot.

TriKKy · 05-12-2008, 07:15 AM

I've had the same argument all over this forum.

However, the calculation is missing a critical element here. The "extra payments you have from buying the 2008 car" shouldn't factor into the equation for 5 years since you are talking about a 7 year old truck at the moment. The calculations above only make sense if you managed to keep your truck around for another 5 years bringing it to 12 years old. There aren't very many people who do that, even fewer with Fords.

dut · 05-12-2008, 07:23 AM

Shiet, I just spent $108 at the pump the other day (like many others on here) and the thought that I may be moving 50-60 miles from work kills me... Although there is a 97% chance I will be getting another car, shiet even possibly a hybrid - the g35 isn't good on gas either.

joeinstl · 05-12-2008, 08:58 AM

I just traded in my '05 KC for an Altima 2.5S. The dealer gave me $16,000 for the trade in, I only owed $14,800 on the truck. My monthly payment went down $85. I am saving $200 a month in gas. As the price of gas goes up my savings will only increase. It was a no brainer situation for me.

So - those of you who are on the fence about trading in your Titan.... Here's my advice. Nissan dealers will generally give you more for your Titan, Honda only wanted to give me $12,500 for the truck. The longer you wait the harder it's going to be to trade in a big truck.

I'm not trying to talk anyone into trading their truck, just passing on what I did and why.

Bullwinkle · 05-12-2008, 09:52 AM

I thought it was obvious, but it's amazing that people will go buy another vehicle without calculating the numbers first.

ryands650x · 05-12-2008, 11:01 AM

I just jumped ship also. I was 3k upsidedown on the Titan and the Hyundai dealership split that difference with me. I walked out of there with an 09 Sonata for 60 dollars less of a payment and 40 less on insurance. they filed the tank for me when i left the dearler and as of right now ive gone 150 miles and the needle is still on the 3/4 hash mark..... couldnt do that in the Titan! My daily commute, starting May 21st is gonn abe 90 miles a day so the truck had to go...