With the price of oil rising above $120, it is the strong suspicion of many industry experts that buyers will soon be spending $4 a gallon for petrol. This would of course mean that American citizens would look for smaller, less gas-guzzling cars, so as not to obliterate their own earnings.

While understandable, there are other aspects to consider if you are considering this type of swap.

If you recently purchased a new car, you are probably dealing with a car loan for which you owe more cash than your car would be worth if sold again. You should also think about how much your old vehicle would get, considering that older cars are less gas efficient.

"Year over year in April, there's been a 17.5% decline in the price for SUVs," says Tom Webb, chief economist for Manheim, an automotive auction company. "Compact cars, on the other hand, are up 2% -- this even though the overall market is down 5%."

It is now recommended to pay for your car with an auto loan when considering the purchase of a new car.

Author's Bio: 

Catherine is an author of several articles pertaining to Secured Loans. She is known for her expertise on the subject and on other Business and Finance related articles.