Trade-In or keep current car?

[cpals]

We got a SUV last year and it's been going great, but lately with our new baby and bills piling up and thinking about her future, etc we've been considering downsizing in order to save on gas and also the monthly payments. Looking at a new or slightly used sedan if we did go that route.

Trade-In value at least according to KBB seems close to what we owe thankfully, but I know it would be hard to get it.

Current Car:
* 2011 Kia (4cyl Auto) Sorento (Has Convenience Package: Heated Seats, Backup Camera, etc and also I installed WeatherTech mats, tint and privacy cover for back)
* Owe - $20,281/3.24% - Monthly is $377
* Miles - 13,000
* MPG seems to be around 19-21 and mostly city driving
* Drives probably a typical 1100-1300 miles a month
* Gas prices here are around $3.91

So, does it make financial sense to keep it or buy something cheaper that uses less gas. Only kink I see is that all of the sedans we'd be looking at would most likely run $15k-$19k and we might not save that much per month on payments?

 

[DaTT]

I don;t think you will get any further ahead by trading down. You might not even get enough to pay off your current vehicle. Would a 4-5 mpg increase really be worth it?

 

[cpals]

At least according to this website, roughly, we could save maybe $100/month from the gas and payments... not sure if it's worth the hassle.

http://www.smartmoney.com/spending/deals/worksheet-should-you-trade-in-your-gas-guzzler-23273/

 

[Insomnihacks]

There are too many variables that go into an educated guess of cost comparison in this situation. What I will hit on though is that used care loans typically have higher interest rates as opposed to new car interest rates. This means the payments could end up being higher over all. Depending on how long you've had this vehicle you could end up qualifying for refinancing at a lower interest rate (Your current 3.24% is really awesome though) and extending the loan out to lower your monthly payments.

The vehicle usually has to be new enough to qualify for a 60-72 month loan as well.