How does a title loan lender determine fair market value of my car?

The value of the vehicle, security interest or collateral is important to determining the loan amount for the borrower. For that reason, most title loan lenders will use the Kelley Blue book portal online to get an accurate fair market value of the vehicle. The value of the vehicle will dictate how much money the lender will provide to the borrower. The established value will help the lender to move forward with the loan approval process.

The Loan Amount

The borrower obtains a certain loan amount based on how much the vehicle is worth. A title loan lender will also look at the auction value of the vehicle that the borrower is using as the security interest or collateral. It is at that time that the title loan lender will offer the borrower a loan amount between thirty and fifty percent of the vehicle’s value. By doing so, the lender has a cushion to enjoy a profit if the vehicle were ever to be repossessed upon loan default by the borrower. With this in mind, the lender would then be able to sell the vehicle at an auction for a profit. Most borrowers will pay off their loan in the allotted time frame to avoid any talk of repossession.

Used Cars

Most title loan lenders will go to the Kelley Blue Book online portal to check the resale value of the car. If your collateral is a used car, then the lender will use this portal to find the fair book value, which is the same as the Kelley Blue Book. If the used car is just a year or two old, then the title loan lender would probably use the invoice price of a new car to do the valuation. Each lender uses a different technique to calculate the value of the loan after getting a fair market value for the vehicle. So, make sure you inquire before you sign the dotted lines.

Industry Standard Source

Kelley Blue Book is the primary source, providing valuation specific to the industry standard. Most new auto dealers use it to find the value of their vehicles. However, used auto dealers use it to as well as insurance companies, banks and factory finance arms. It is considered the manual of the auto industry and one that is usually referred to the most. NADA Guides is also used and is called the “Black Book.” The Galves Guide Series is also quite popular, but often used for a more conservative value. If you go to a dealership, you will find that sales reps used a combination of these guides to get an average value.

Vehicle History

A history of the vehicle is also important to the title loan process. Most lenders will use CarFax or Edmund’s to obtain the vehicle history, subsequently establishing the specific value of the vehicle. The report is detailed with more information on the car. An auto check can provide a history of the vehicle. This would include:

  • Whether the vehicle was in a collision
  • Whether there are any reported title brands
  • Whether there is a report that the vehicle was salvaged or junk
  • Whether there is a report that the odometer had been tampered with

Whether the vehicle is new or used, the process is the same for potential borrowers of title loans. The title loan lender has to find the value before proceeding and Kelley Blue Book pricing is usually what is used. To assume the fair market value, the lender will need to know the VIN number, odometer reading along with the make, model and year of vehicle. If you have an exotic vehicle, you have to seek a private appraisal.

 How does a title loan lender determine fair market value of my car?

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