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Do I Need a Vehicle Appraisal to Refinance My Car?

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You do not have to appraise your car when you refinance it, but your lender definitely will. The appraisal matters because the car’s value is a major factor in determining the rate of your new auto loan — and whether you receive one at all.

What is a car appraisal?
Why you may need a car appraisal
What do appraisers look for in a refinance?
Why is an appraisal important for refinancing?

What is a car appraisal?

A car appraisal is the process of finding out how much a car is worth. Any refinance lender you apply to will look up how much your car is worth —  and you can look it up, too. Here are three ways:

  • Online. You can get your own simple appraisal any time you’d like using the free, online industry guides that lenders and dealers use like Kelley Blue Book (KBB) or National Automobile Dealers Association guides (NADAguides). Whether you’re buying, selling or refinancing a car, getting an online appraisal is smart.
  • At a dealership. You can ask a dealership. Dealers routinely appraise trade-in cars and it may offer the service if you’d like an appraisal for a refinance.
  • An independent appraiser. The most thorough type of appraisal you can get is through an independent professional car appraiser you hire. This would typically be necessary for legal reasons, such as a divorce or estate settlement or if your vehicle was particularly valuable, say, a classic car.

What is ACV or fair market value?

Actual cash value (ACV) is what your car is worth in cash, right now. It’s also called the fair market value. The point of a car appraisal is to tell you the ACV or fair market value of your car. Dealerships tend to use the term “ACV” and online appraisals tend to use “fair market value.”

Why you may need a car appraisal

You may need a car appraisal whenever you plan to sell, trade, give away or, in this case, refinance your vehicle. In all cases, it’s a good idea to know what the car is worth so you know you’re getting a good deal. You might also need an appraisal for tax purposes, if donating your car to charity, for example. You could use this auto loan refinance calculator to play around with your specific numbers and see much you would save by refinancing.

What type of car appraisal should I get?

If you want some quick knowledge, go online to KBB or NADAguides. If there is a problem and you think your car is worth more or less than what the refinance auto lender says, consider getting one from a dealership or an independent professional.

Where can I find a professional car appraiser?

Ask the lender for a recommendation. You could also call a local insurance agent or a dealership and ask for a referral. Otherwise, search online. Make sure the person or the company has a good reputation and that their appraisal will be accepted by the refinance company or entity you are dealing with.

What do appraisers look for in a refinance?

If you hire a professional to appraise your car, you could expect them to look at three things: the car’s online appraisal value, the car’s history report and the car itself. Here are some reasons your car may be worth more or less than what you or the refinance company may think.

  • Your car may be worth more if it is in excellent condition with little wear and tear, few miles and no problems.
  • Your car may be worth less if it was in an accident, stolen at some point, totaled, suffered a natural disaster, has a lot of wear and tear, has a lot of miles or has problems in general.

Why is an appraisal important for refinancing?

If you compare what the car is worth with what you owe on the car, you can find out whether you have positive or negative equity on the car. Knowing this could help you get an idea of what to expect when you do apply for refinance.

  • You have positive equity if your car is worth is more than what you owe on the car. That’s a great sign that you might be able to get a good deal when you refinance.
  • You have negative equity If you owe more on the car that what it is worth. You may have a harder time finding a good deal on auto refinancing. Learn how to deal with negative equity here.

If you’re not sure how much you owe, call the lender and simply ask how much you owe on your car loan. The lender might call it a payoff, which is how much it would take to “pay off” your loan. You may also want to find out and write down what your APR is on your current auto loan if you don’t already know.

In either case, you should shop around for auto loans and not take the first offer that comes your way. You will not hurt your credit by applying to multiple lenders within a 14-day window any more than you would by applying to one lender. Possible lenders include your bank, credit union and online lender. You could also fill out an online form at LendingTree and receive up to five potential refinance offers.


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