The used car loan value is not equal to its price or book value. Loan value is the amount a lender will let you borrow to buy the vehicle and will pay a certain percentage on it. This is important because the loan value may be less than the price and chances are you can get in low price. You’ll need enough down payment to cover the difference between the cost of the car and the loan value. Used car loan values are based on the book value of the particular vehicle and the lender’s policies.
Here are the steps to calculate used car loan value
First you need to access the car. A vehicle’s book value and therefore its loan value depends on its individual features and condition. To start, you’ll need the following information:
- Year, make and model
- Current emissions test
- Maintenance records and vehicle history, if available
- Paint and body, including any past work performed
- Windshield and lights
- Frame condition and past damage
- Wheels and tires
- Interior features, including upholstery and electronic devices
- Steering, brakes and air conditioner
Determine the book value of the car to determine the used car loan vale. put the information from the start into evaluation tools on the Kelly Blue Book or NADA websites. These services provide fair market value estimates that lenders typically rely on when figuring car loan value.
Contact the bank or credit union where you plan to finance the car and check with them the used car loan value. Ask for the loan to value ratio for auto loans. The LTV is the maximum percentage of the book value the lender will let you borrow. Used car loan value is calculated using the LTV.
If your bank tells you the LTV is 80 percent and you found that the book value of the vehicle is $15,000, you’d have book value of $15,000 times 80 percent LTV, which equals a $12,000 loan value. In this example, the bank will lend up to $12,000.