Does it make financial sense to downsize your car?

By: Michelle Carolla | SCNOW
Published: May 27, 2008

Most car dealerships are happy with sales of smaller cars, even in this down economy. suv’s, on the other hand, offer little to no value to them with today’s record-high gas prices. Some dealerships aren't even taking them in on trade.

Before you rush to trade in your larger car for a smaller car or a hybrid, you should first run the numbers to make sure the deal is worth it.

Pam Cox of Sumter said she's had it with gas prices and traded her mid-sized SUV for a Toyota Corolla. She wanted a hybrid Prius but she can’t find one to buy.

"They told me they had one I could test drive but it would be 12 weeks before I could own one," said Cox. However, she didn't want to spend another day paying nearly four dollars a gallon for gas. "I'm settling for a Corolla and I think it will be worth it in the end,” said Cox. "I get about 23 miles to the gallon but I have three kids and I'm always running them all over the place so I'm just looking for something that will be better on gas mileage."

But, is she making the right move? Consumer Reports released a report warning against rushing to buy a smaller car saying it can cost you more in the long run.

For example: A Toyota Prius runs approximately $24,000 while a Corolla costs approximately $18,000. That equals a $6,000 dollar difference. If you drive an average of 30 miles per gallon at $3.70 a gallon, that’s a Prius will save you $54 a month. It will take ten years to make up price difference.

After seeing the breakdown, Cox thinks the Corolla is the better move after all. "I trade-up every two to three years so I don't think I would be able to make it up."

Those numbers will vary depending on much you drive and the price of gas. Sparks Toyota in Myrtle Beach told News 13 23 people are on their Prius waitlist.

So, you'll need to weigh out the costs of a hybrid versus other options. Hybrid's are also about reducing your carbon footprint, that's the total carbon dioxide emission level.

There's not much difference between a Prius and a Corolla. The Corolla is a 6.1 and the Prius rates a 4.0 on a scale of 3.5 to 16.2, with 16.2 being the highest.

If you're considering scaling down, weigh out the price of the new car versus the value of your trade-in, if you have one, and how long it will take you to make up the price difference with the amount of money you expect to save on gas. That will tell you if it's a smart move.

For more information: http://www.fueleconomy.gov