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Old 07-16-2012, 05:42 PM   #1
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Why is the bank being so difficult? Am I missing something?

Hey guys,

For the past week or so my sister-in-law has been fighting with our bank over a loan. She got pre-approved for $5000 towards a used vehicle. She found a vehicle, but the bank is jerking her around...so I am looking for some advice because what they are telling her does not make any sense to me.

So here we go...

-Bank has approved her for $5000.
-She found a vehicle through a private party for $4500 firm.
-According to KBB, private party value was $5300 in very good condition (so this should be a decent deal for her.)
-The bank told her that the vehicle she is looking at is only worth $4100.
-According to KBB, trade in value is only $4100.

My question to you guys is...why the hell is the bank looking at trade in value for the loan? It does not make any sense to me, because no one is "making out" on that kind of deal...

She is currently applying at another bank since this one isn't working with her. Thoughts guys?

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Old 07-16-2012, 05:54 PM   #2
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Banks will usually only finance a percentage of whole sale book(trade in value). If you look hard enough you may be able to find a bank that doe 100% of retail, but this this is getting harder and harder to find. To answer the question why. If the bank does wind up repoing the vehicle, they are only going to get whole sale minus depreciation for it.

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Old 07-16-2012, 05:56 PM   #3
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Originally Posted by TOKKIE View Post
Banks will usually only finance a percentage of whole sale book(trade in value). If you look hard enough you may be able to find a bank that doe 100% of retail, but this this is getting harder and harder to find.
Interesting...I just would have assumed that the banks would have worked on the same system as everyone else as far as private party, trade in, etc.
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Old 07-17-2012, 09:41 AM   #4
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You have to remember that banks are out to make a profit, so they use KBB values as a benchmark. If she belongs to a credit union or can join a credit union, she maybe better off going that route. Credit unions are member owned and sometimes you can get a better interest rate from them.
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Old 07-17-2012, 10:44 AM   #5
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Originally Posted by Cons_Table View Post
Interesting...I just would have assumed that the banks would have worked on the same system as everyone else as far as private party, trade in, etc.
Who is "everyone else?" Ask the seller to come down to 41 or have per pay the difference. The bank isn't going to put themselves on the hook for more than they can get is she defaults. Frankly, I'm surprised they went that high.
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Old 07-17-2012, 11:24 AM   #6
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Quote:
Originally Posted by bbtj View Post
You have to remember that banks are out to make a profit, so they use KBB values as a benchmark. If she belongs to a credit union or can join a credit union, she maybe better off going that route. Credit unions are member owned and sometimes you can get a better interest rate from them.
I always catch myself calling our credit union a bank...not the same I know haha. This was through a credit union though. She ended up going to another credit union that had no problem financing her...so all is good now.

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Who is "everyone else?" Ask the seller to come down to 41 or have per pay the difference. The bank isn't going to put themselves on the hook for more than they can get is she defaults. Frankly, I'm surprised they went that high.
Everyone else...as in us. For example, if you planned on selling a car and based it off of KBB, would you sell it at Private-Party value or Trade-in value?
I would assume private party, since that means more money for you. Also, if I was going to buy a car from you (say cash, rather than loan) I would also check the private party value of your car to make sure your asking price was in that ball park. The only time I would check trade in value is if I intended to go to a dealer and haggle with them over what my car is worth as a trade in. It just seemed to me the credit union would have looked at the price that we would typically go off of we were handling the situation without them.
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Old 07-17-2012, 11:43 AM   #7
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I always catch myself calling our credit union a bank...not the same I know haha. This was through a credit union though. She ended up going to another credit union that had no problem financing her...so all is good now.



Everyone else...as in us. For example, if you planned on selling a car and based it off of KBB, would you sell it at Private-Party value or Trade-in value?
I would assume private party, since that means more money for you. Also, if I was going to buy a car from you (say cash, rather than loan) I would also check the private party value of your car to make sure your asking price was in that ball park. The only time I would check trade in value is if I intended to go to a dealer and haggle with them over what my car is worth as a trade in. It just seemed to me the credit union would have looked at the price that we would typically go off of we were handling the situation without them.
You are talking apples and oranges. Which number would you use to determine how much money you would loan to a complete stranger? BTW dealer's don't use KBB. I believe it's NADA, which is always lower than KBB.
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Old 07-17-2012, 02:23 PM   #8
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Quote:
Originally Posted by daggo66

You are talking apples and oranges. Which number would you use to determine how much money you would loan to a complete stranger? BTW dealer's don't use KBB. I believe it's NADA, which is always lower than KBB.
Touché. Either way, she found a credit union that was able to work with her. They used NADA as well.
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Old 07-17-2012, 03:17 PM   #9
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Old 07-18-2012, 08:05 AM   #10
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Have you forgotten that the economy is in the crapper? What's a big part of that? Because lots of D-bags borrowed more money than they could afford. The banks had eyes bigger than their stomachs and lent out millions that they couldn't re-coup. Uncle Sam had to come in and bail some of them out. Which I think is a crock of you know what.

Now I'm not saying that your SIL can't re-pay her loan but the bank doesn't know that and they are just playing the CYA game. For those who don't know CYA is cover your a$$!
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Old 07-18-2012, 02:39 PM   #11
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Good

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Originally Posted by Cons_Table View Post
Touché. Either way, she found a credit union that was able to work with her. They used NADA as well.
Then all is well.

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