Lenders determine the value of your vehicle, which serves as the basis for the loan amount you can qualify for, through a process known as vehicle appraisal.
In-Person Inspection. Many lenders require borrowers to bring their vehicles to a physical location for an in-person inspection. During the inspection, a trained appraiser will assess the vehicle's condition, including its make, model, mileage, overall appearance, and any signs of wear and tear. They may also consider any aftermarket modifications or upgrades.
Vehicle History Report. Lenders often obtain a vehicle history report, such as a Carfax report, to check for accidents, title issues, and other relevant information. The report helps determine the vehicle's history and potential impact on its value.
Online Valuation Tools. Some lenders use online valuation tools and databases to estimate a vehicle's value based on its make, model, year, mileage, and condition. These tools provide a general valuation, but an in-person inspection may still be required for a more accurate assessment.
Market Value. Lenders also consider the current market value of similar vehicles in your area. They may use sources like the Kelley Blue Book or NADA Guides to determine the market value and adjust it based on your vehicle's specific condition.
Photographs. Borrowers may be asked to provide photographs of their vehicle from various angles, both inside and out, to help lenders assess its condition and value.