It seems like a no-brainer. Gas prices have spiked past $4 and many drivers' wallets are getting hammered at the pump. So it might be a great time to trade in that gas guzzler for a new, more fuel-efficient model, right?
Well, drivers should consider all the options before pulling the trigger on that trade-in. It's true that upgrading to a more fuel-efficient vehicle can be desirable with gas prices seemingly getting higher every day. But drivers will have to weigh the benefits against the costs – which can be significant, the Philadelphia Inquirer reports.
SUVs typically get somewhere around 15 miles per gallon, while many of today's new models can get above 30. So essentially, drivers who are upgrading from a gas-guzzler to a hatchback or sedan can expect to cut their monthly gas prices in half.
But whether this is worth it or not ultimately depends on how much you are spending on gas each month. If you're putting a lot of miles on the car, you might be able to save yourself $100 per month or so. Of course, you'll have to take into account the costs associated with purchasing a new vehicle. If you're using a car loan, you'll likely have an increase in monthly payments – one that would likely offset the monthly savings on gas. Your insurance premiums could rise as well, which also lessens the fuel efficiency savings.
That doesn't even begin to factor in the initial investment for a car. Hatchbacks are all the rage right now and as such are selling for high prices. SUVs, on the other hand, aren't exactly in high demand – so you may not be getting a lot on your trade-in.
"If you have a large SUV and are wondering whether to trade it, I would say absolutely not unless something dramatic has changed in your life – like the miles you drive daily," Jesse Toprak, vice president of industry trends and insight at TrueCar.com told the news source. "You're trying to buy something that's hot and trade something that's not – which is not a good scenario."
That's not to say that trade-ins aren't a handy tool – it's always nice to get some money for a vehicle, and if it really is time for a new car it's probably the best way to handle it. But switching out of a car early simply because of the gas mileage typically leads to buyer's remorse. For example, savings could be significant now with gas prices high, but drivers may miss the size and utility of their SUV when the prices drop again.
A smart driver will look past the miles per gallon and factor in all the costs that can come with a new vehicle. If they don't, a move to save money could end up quickly costing them. For some guidance on how a driver can make their vehicle work for them, the experts at New Jersey State Auto Auction can recommend a vehicle that will make sense financially.