| Gas
prices in the country (actually worldwide too) have been increasing for some time
now. With the Middle East controlling most of the oil trade, global economy is
working towards an increase in the oil prices, resulting in a higher cost per
gallon for the common person for gasoline. Experts state that the trend is unlikely
that we will see a slow down or reversal in this trend for a few years now. It
almost seems as if the big three in Detroit, namely Ford, General Motors and Chrysler
have led us to purchase
large SUV's. These car manufacturing giants have done this by subliminally
suggesting that they have a connection with Washington and that all those who
buy their cars shall never have an issue. Well, things have definitely not been
as planned. What has happened is that oil companies have made large revenues due
to the amount of gasoline that these vehicles guzzle. Earlier,
we would see the large SUV's driving (well, almost flying) down the highways and
we all wondered at them in awe. The amount that these vehicles cost can sometimes
be compared to small townhouses that some people buy. However, the tables have
turned now and we hear of these owners whining about the increase in gas prices
and how it is almost unaffordable to continue driving SUV's. The result
of all this has been fairly obvious. Most of the SUV and large vehicle owners
are today trying to get rid of their vehicles and are trading them for smaller,
fuel efficient smaller cars. Trading
in the SUV with a smaller car has almost become a rage in the country. However,
due to the great demand for turning in the SUV's, the used-car markets have already
adjusted the value of the SUV's downwards. And therefore, most of the SUV owners
today trade their vehicles at a loss. You
can do some simple mathematics to understand whether you gain from trading in
the old SUV or not. For example, consider a 2007 Ford Expedition Eddie Bauer with
an initial price of approximately $35,500. If the vehicle has run about 15000
miles, it is likely to fetch you approximately $19,000 now. A year and a half
old vehicle is likely to have a pay off of about $28,000 and therefore the net
amount that you will still have to pay off to the car loan is $9000 ($28,000 -
$19,000). This creates a negative equity of $9000 for you. Due
to this negative equity, you will add about $180 per month to your new car payment,
calculated on the basis of a 60 months loan with an interest of 6.5%. Next
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