If you are shopping for cars, RVs, motorcycles, boats, and more, then you are probably hearing terms like NADA value. You may be wondering how it will affect your car, boat or RV loan. Once you understand the basics of the NADA value, then it’s easy to see how it can positively affect your loan.
What is NADA?
NADA is the National Association of Automobile Dealers. The first NADA guides were issued in 1933 in the Great Depression at the request of the federal government. Over the years, the NADA guides have become the premier resource for finding the value of vehicles. Since 2015, the NADA guides have been licensed to J.D. Power.
The NADA value is the value of your vehicle based on many different value factors. The NADA guides have values for automobiles, motorcycles, boats, RVs, and even manufactured homes. The NADA guides give multiple values for each vehicle. This depends on whether it is the auction value, trade-in value, private party value, or even the used car dealer price. The prices are compiled from actual purchase information and are regularly updated. This provides some of the most important information when it comes to used car values.
NADA Value Factors
Several different factors affect the NADA value of your vehicle. In fact, all of the factors combine together to give an accurate picture of the genuine value of the vehicle. Sentimental value is not one of these. There are 4 major factors that affect NADA value.
Location of vehicle
It’s pretty straight forward to know that mileage and condition affects the value, but less so when it comes to vehicle location and optional accessories.
Optional accessories affect NADA value because they definitely add value to a vehicle. Of course, optional accessories like automatic transmission and air conditioning are very important selling points for a vehicle. Generally, the more optional accessories the vehicle has then the higher the NADA value is.
Location affects prices as well. Not only is there a rural vs. urban divide when it comes to car prices, there is also a regional disparity. This disparity can be caused by economic differences between areas. It can also be caused by supply and demand issues. There can even be seasonal price differences. Not surprisingly, there is less demand for a convertible in December in a place like North Dakota than there is in Florida. While location doesn’t play a huge part in vehicle values, it is something to be aware of.
NADA Values & Car, Boat or RV Loans
Now that you know a little bit about NADA values, it’s important to know how NADA values affect your loan. When a bank, credit union, or finance company gives you a vehicle loan, they are securing the loan with the value of the vehicle. The NADA value tells the bank just how valuable the vehicle is. This provides them with how much they can loan on the vehicle and how much down payment you’ll need to come up with.
Knowing the NADA value can help you in two ways when it comes to getting an auto loan. First, you can negotiate for a better price using the NADA value as your guidelines. You shouldn’t pay more than the NADA value, no matter how much sentimental value the previous owner puts on the car. Secondly, you can ensure that every optional accessory is listed on the loan application to ensure that the maximum NADA value is shown. This could even result in a lower down payment, depending on the lender. Knowing the NADA value and how important it is to your car loan will help you get the best value for your money.