I congratulate you as a college student for being responsible to paying your debts and looking to the future. Many people, young and old, can't see past their immediate enjoyment and get way to deep into debt. I don't know all your financial details, so in the end you need to make your own decisions. So don't let me talk you into keeping your Jeep if that is not the best option for you. But here is something else to consider. Resale value, quality of life, time without a Jeep.
Lets assume you can sell your Jeep for $25,000. What are you going to do with that money. Will it all go into a new car or will you buy a cheap car and invest the difference? If you drop the whole $25,000 on a new car, what do you think that care will be worth in 10 years? Most don't hold much value in the long run. I expect the car might be worth $12-$15,000. If you can buy a cheap car for say $15,000+/- and invest the other $10,000 in a S&P 500 index fund. Then in 10 years you should have a fund worth about $20,000 but your car will need replacing.
Now lets consider what happens if you keep the Jeep. You will definetly pay more for gas. But how many miles a year do you drive and how much more will the fuel cost? If you drive 15,000 miles a year and get 15 mpg you will burn up 1000 gals of gas. A small car might be able to do twice that. So it will use 500gals. At $2.50 per gallon the jeep will cost $1,250 more per year in fuel. That does add up over a 10 year period. As far as insurance, you may or may not pay more for insurance. New cars are expensive to insure. Jeeps are not that bad. You need to call your insurance guy to see how much it cost to insure the car you are looking at compared to the Jeeps insurance for similar coverage. Also what will the Jeep be worth at the end of 10 years. Jeeps hold their value exceedingly well. I expect your Jeep will be still be worth $18-$20,000 in 10 years. Certainly it will be worth more than any car you could purchase with the full amount from the Jeep. In short what I am saying is you need to figure our your full cost of ownership for each vehicle over the next 10 years. Don't look at only gas mileage. Look at all items from gas to maintenance cost, to insurance to resale.
Finally you need to consider just how much you like your Jeep and how often you get offroad. If you never get off road and a fun car can provide all your driving entertainment, then maybe its a good move. If you really enjoy getting out into the woods with your Jeep and you think that you would be looking for a new jeep again within 5 years, then you might want to think twice about selling your Jeep. Unless your patient with buying and selling vehicles, it can be quite expensive to switch vehicles and you might be better off just keeping the Jeep and finding other ways to cut down on expenses over the next 5 years.
Don't get me wrong. Sometimes its good to sell a vehicle to meet certain needs for the time. There will always be other jeeps out there if you want one again in the future. I'm just advising to consider all cost of car ownership as well as the joy that you get in driving the vehicle before you make that decision. Its easy to get excited about saving all that money on gas and having a new car. But often Jeep ownership gets into your blood and you will always want one. So count all the cost before you move to quickly. It sounds like you are already doing this. And to that I say congratulations. You will do well in life.
Good looking Jeep by the way. I LOVE that color.
