Villian is somewhat loose but nothing other than average

Party Poker No-Limit Hold'em, $0.5 BB (10 handed)

UTG ($54.8)
Hero ($51.25)
UTG+2 ($23.65)
MP1 ($162.65)
MP2 ($100.5)
MP3 ($71)
CO ($57.65)
Button ($75)
SB ($62.45)
BB ($47.35)

Preflop: Hero is UTG+1 with , .
1 fold, Hero calls $0.50, 6 folds, SB completes, BB checks.

Flop: ($1.50) , , (3 players)
SB checks, BB checks, Hero bets $1.5, SB calls $1.50, BB folds.

Turn: ($4.50) (2 players)
SB bets $3, Hero calls $3.

River: ($10.50) (2 players)
SB bets $5, Hero calls $5.

Final Pot: $20.50

Results in white below:
SB has Tc As (two pair, aces and tens).
Hero has Qc Ac (one pair, aces).
Outcome: SB wins $20.50.

When should I have known to fold, when he called my bet and then bet out? I wasn't sure if I was good so I decided to call him down as he was making it affordable. Not good play on my part but how should I have played it? folding on the turn seems too weak and raising it seems too strong.

If you minraise on the turn, you save money.

If he re-raises your minraise, obviously you're done with the hand.

If he calls your minraise and then leads out again on the river, that is also showing monster strength and you can fold.

If he calls your minraise and then checks to you, you can check behind on the river.

Any way it goes, you save 2 bucks.

Just a thought.

You played the hand similiar to the way I play AQ in EP. You are either way ahead (against a weak ace or flush draw) or way behind (you were) on the turn. By just smooth calling I think you saved money. Well played.

YD

Yeah, I think you played the hand fine. If he had bet the flop, I think a raise would have been in order, but after the check-call on the flop, I think flat calling the turn is a better play than raising. I don't like this minimum raise stuff really in general, and I don't think you have enough hand to really hit the turn hard.

I agree with Yoga that the way you played it saved you money. It's also clearly too much hand to just lay down.