The Little Black Book

Oftentimes during the process of negotiating a price, customers will refer to the Black Book.

The Black Book represents the agreed-upon range of values for a given vehicle in the eyes of lenders.

That is, the Black Book gives figures regarding what amount of money a financial institution will likely be prepared to lend out in order for a borrower to purchase a given vehicle. Lenders choose a value low enough that they feel they have completely controlled their risk should they be forced to foreclose and sell the vehicle.  They choose an amount that they will have no trouble getting, in other words, a value generally significantly below the actual market value for the vehicle in question.

The Black Book is much like a property appraisal.

When you receive a property appraisal from the city, for example, you are told what value the city places on your property for the purposes of taxation.  This value is virtually unrelated to the market value of your home.

In the same way, Black Book value is virtually unrelated to the market value of a vehicle.

Now, the market value of a vehicle at any given moment in time might happen to align with the Black Book value of a vehicle at any given moment in time.  Or it might be very, very different.

When you list your home (or consider buying a new home) it is of only minor consequence what the government's appraised value of your home is.  If you sell your home at that price in less than a day, chances are you're going to feel that you underpriced it.  If you've had your house listed for 4 months and have had no showings, you should probably consider that you've almost certainly overpriced it.

The point, clearly, is that the only way you can tell what actual market value your house, or your car, has, is to try to sell it.

Which is what we do, all day, every day.  Our livelihood depends on being aggressively up-to-the-moment on actual market values of vehicles.  That's the only way our company can hope to buy and sell and pay our overhead and make a profit.

Bankers do not keep abreast of vehicle values.  Nor do other lenders.  They are not investing in vehicles, but in customers.  Their only interest in vehicle values is in choosing a low value to manage the risk they take betting that borrowers will pay back what they've borrowed.