Used Car Financing

[Anonymous]

When financing a used vehicle, i.e. 2 years old, 20k, will value be based off of NADA trade or retail value?  I know LTV ratio is lender/ credit profile specific but which values are used. If retail is used I may be able to roll some neg equity into a used.  If not I will just look at new vehicles with rebates. Thanks. 

[pipeguy]

I've financed two used cars recently 1 through DCU and one through NFCU, each has their own standards but I believe its 120% of current "book value" - pretty easy to call and ask along with prequalifing. 

That said, I'n not sure I'd roll negitive equity into a new loan because it just gets you further under water, either new or used - rince and repeat. At least with a used car the major "out the door" depreciation has already occured.

My suggestion (I know you didn't ask) is to either pay off the underwater amount directly or if that's not possible, keep the car and double up payments until you are break even or shop for a cheaper used car (I know none are what you want to hear). 

[Anonymous]

How is "book" value determined? Retail, trade or something else? 

[Anonymous]

Which book value is used, is different per each lender. So that is a very hard question to answer specifically without listing a specific lender. For example, Wells Fargo, Ally, Capital One, US Bank, Santander, etc all use NADA Clean Trade values. Many credit unions, Commerce Bank, Etc use NADA retail values. Adding in some more complication's to your question is that different region's use different appraisal services. I know of many banks/financial institution's that will use Kelly Blue Book on the East coast, and some that us Black Book values. As far are LTV ratio's they are really all over the place, Ally/Well's Fargo/etc will often finance up to 135-140% of NADA clean trade value before any "backend add on's" such as GAP. And some Bank's/CU's that use NADA retail values I have seen finance as high as 120% of retail.

[sonicchris8]

I think Navy FCU will use NADA Retail and will finance up to 130% I think. The values they gave me were the same as what I found on the NADA website myself. PenFed CU will do %110 of NADA Retail and the values they gave me were the same as what I found on NADA website. Hope that helps some.