|
 Dear
Terry,
I am almost 18 months into my five-year car loan
and owe approximately $13,500. I love my car but
am now working farther from home and have been
thinking about the pros and cons of changing cars
to get something more fuel efficient. My car is
a V6 2002 Acura TL sedan and requires premium
fuel.
I am curious if the loss that I would take on trading or selling cars so soon into my loan would be greater or less than the savings I would see over time in gas costs.
Basically, I'm trying to decide whether to stick it out and
finish the loan or to go ahead and get out from
under the car now. I do not have extra cash to
add to the deal as I am working hard to pay off
some credit card debt. I have been looking at
hybrids and also smaller gas vehicles with better
fuel economy.
-- Curious Consumer
 Dear
Curious,
Let's start with your loss if you get rid of the
TL. Depending on whether you trade it in or sell
it to a private buyer, you're going to come up
$2,000 to $4,000 short of what you owe. Now, let's
consider the difference in fuel efficiency. Let's
assume you drive 12,500 miles per year and that
regular gas is $3.10 per gallon and premium fuel
is $3.50.
Your TL should be averaging about 22 miles per gallon.
Let's assume you buy a new vehicle that gets 32 mpg on regular fuel.
Over the next three years with the
TL you will burn up $5,964 worth of premium fuel.
With the new vehicle you will consume about $3,627
in gas over the same period -- for a savings over
three years of $2,337. In other words, you will
have to drive about 37,500 miles over three years
to offset the loss in value you are likely to
experience by selling your TL prematurely.
Also, you'll probably have to deal
with higher monthly payments for a newer vehicle
that will get the mileage you're seeking and your
insurance costs may be higher.
The choice is yours, but taking a loss on your TL to get a more economical vehicle is not a slam-dunk decision.
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