Should you trade in the gas guzzler?

May 13, 2008 6:00:57 AM PDT
In our latest "On the Money" segment, we're talking trade in. As in, should you trade in your car for a hybrid.It is topic number one in many households - getting rid of that gas guzzler for a car that is perhaps more economical.

But before you do, Eyewitness News reporter Kemberly Richardson crunches the numbers to see how much you'll really save.

So the dizzying numbers at the pump have finally sent you over the edge. You've made up your mind to trade in your gas guzzler for a more fuel efficient vehicle, say a hybrid.

"I would consider it if the prices keep going up, of course," one diver said.

Not so fast! The folks at warn not to focus on just those numbers.

"I tell people don't make a panicky decision because you're definitely going to lose money," Edmunds' Phillip Reed said.

Their advice is to look at the big picture.

If you decide to get rid of your old SUV, beware - trade-in prices are at an all-time low. And there's more.

"You're going to have to pay sales tax on the new vehicle," Reed said. "If decided to move to a hybrid, hybrids are selling at a very high price, whereas you're going to get a very low price for your trade in."

We did the math for you. Buy a new $15,000 car in New York, and you'll pay about $1,200 in sales tax. If the sticker price is $25,000, the tax tips the scales at just more than $2,000. And for a $35,000 vehicle, you're looking at $3,000 in sales tax.

Then, figure out how much your new car payments will be. And don't forget other hidden fees, like if you're in the middle of a lease, the price you have to pay to get the title.

John LaSorsa, of the LaSorsa Auto Group, says it all adds up and can far exceed the money you'd save at the pump. In many cases, he says, you'll end up in a negative monthly zone.

"I think the first thing you have to do is evaluate the type of vehicle you need for your lifestyle," he said. "Some people need a van, some need a four-door sedan. Once you figure that out, you can get the price of the car and compare it against fuel ecomony and new monthly payment and see what works best in their situation."

Money aside, there are some very good reasons to consider buying a more fuel efficient car. There's the obvious environmental factor, and it's also one way to help lower our dependency on oil imports.

And as manufactures put more hybrids on the road, more families are not scared off by the sticker prices.

"When they frist came out, they were commanding about a $2,000 premium," Reed said. "Now, there are places where you can get them at sticker price."

So before you throw in the towel, do the math. What seems obvious may end up costing you.

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Links to Information and Resources:

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    Westchester Department of Consumer Protection:

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    Government Accountability Office:

  • Guide to Understanding Retail Gas Prices (PDF)