Trading in you gas guzzler? Make sure it's worth it!

Previously I had posted a link that allows you compare vehicles side by side and gives some very useful information concerning fuel costs. I recently came across a more useful tool that actually breaks down your cost savings per month and the estimated time it would take for you to realize these savings based on your trade in. The value of your trade in is based on estimated fair market value.

The example I have here assumes that I am trading in my 2005 F-150 for a new Honda Civic LX 5 speed coupe:

2008 Honda CivicLX 2dr Coupe (1.8L 4cyl 5M) $17,325

2005 Ford F-1502dr Regular Cab XLT 2WD Flareside 6.5 ft. SB (4.6L 8cyl 4A)

My Trade-In Value (includes typical options): $12,126

Cost of Fuel-Efficient Car Minus Trade-In: $5,199.00

MPG of Fuel-Efficient Vehicle: 30

MPG of My Trade-In: 15

Number of Miles Driven per Month: 1000

Price of Gas: $3.95

Amount Saved on Gas (per month): $131.67

Number of months to break even and begin saving money on gas: 39

Seem a little unreasonable? Most people trade in their cars every three years or so, so my estimate of 39 months seems like it wouldn't be worthwhile to make this trade. However, there are many other things to take into account here.

For one, my truck isn't paid off. My current payment is $340 a month. With a down payment of $5000, my payment on the Civic would be around $220 a month. I could easily sell the truck outright and get somewhere near the estimated retail value of $17,120 considering it has several thousand dollars in upgrades that aren't accounted for in the blue book pricing.

Add the savings of $120 a month on the car payment with the $131.67 in gas savings and you're looking at a monthly cost reduction of $251.67 a month! Not to mention that I would have a vehicle that has 0 miles on it compared to 35,000. And a better resale value. The only negative to this experiment is that I would be acquire roughly $5,000 more debt, the difference between what I owe on the truck and the cost of the Civic.

Try it yourself and see what your results are!