The full value of one motor vehicle is exempt as a resource to a budget group. The CAO must count the entire equity value of additional vehicles as a resource.
The CAO must consider all vehicles, whether they are licensed or unlicensed.
Example:
Mr. and Mrs. C. apply for TANF for themselves and one child. Their only resource is one jointly owned motor vehicle. The budget group is entitled to the exemption for the motor vehicle.
The owner of a vehicle is the person whose name appears on the title or the owner's card.
The CAO must first determine the fair market value of all motor vehicles owned by the budget group.
The following information is needed to determine the fair market value of a motor vehicle:
Make
Model
Style (coupe, sedan, convertible, etc.)
Year
The fair market value of a vehicle may be verified by a reliable source, such as a written statement from a car dealer or from a published car wholesale book, commonly referred to as the “Red Book” or “Blue Book.” The CAO must use the average wholesale price to determine fair market value. It must not consider any optional equipment or low mileage.
Reminder: The CAO must give the budget group an opportunity to refute the CAO determination of value. The vehicle is worth less than the book price if it has excessive mileage, body damage, or some other defects. The CAO must advise the person to get further proof of the vehicle’s fair market value if the owner thinks the vehicle is not worth the book price.
The person may get a written estimate from a reliable source, such as a car dealer or a loan department of a financial institution, as proof. The CAO must use this documentation and record the facts in the case record. The CAO must keep the verification for three years from the date of the decision.
Verification of the amount owed may be obtained from the financial institution that issued the loan. The amount owed is the balance owing on the date of valuation.
Equity value is determined by taking the fair market value of each vehicle and subtracting the amount owed on the vehicle. The result is the vehicle’s equity value.
If the budget group owns one motor vehicle, no further action is needed. The motor vehicle is an excluded resource.
If a budget group owns more than one motor vehicle, the CAO must exclude the vehicle with the greatest equity value and count the equity value of the other vehicle.
Examples:
The Stine budget group owns two automobiles. Vehicle #1 has a fair market value of $3,200 and an outstanding loan with a principal balance of $1,950. Vehicle #2 has a fair market value of $400 and is owned free and clear.
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$3,200 = Fair market value of vehicle #1 |
Vehicle #1’s equity value is exempt from consideration as a resource. Only vehicle #2’s equity value of $400 is added to any other countable resources when determining eligibility.
Mr. and Mrs. E. apply for Cash Assistance. They report owning two motor vehicles: a truck with an equity value of $2,000 and a car with a $500 equity value. Their only other resource is $200 in a bank account. The budget group receives the full equity value exemption for the truck. This leaves a $500 countable resource on the equity value of their car, which is added to their additional $200 resource. The budget group’s total countable resources are $700. They are eligible for Cash Assistance.
The Johnson budget group owns two automobiles. Vehicle #1 has a fair market value of $3,000 and an outstanding loan with a principal balance of $1,500. Vehicle #2 has a fair market value of $300 and is owned free and clear.
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$3,000 = Fair market value of vehicle #1 |
Vehicle #1’s equity value is exempt from consideration as a resource. Only vehicle #2’s equity value of $300 is added to any other countable resources when determining eligibility.
NOTE: Even if the loan for a motor vehicle is in another person’s name, the principal balance is deducted from the fair market value. Regardless of who is making the payments, the loan would have to be paid if the vehicle is sold. This is true as long as the motor vehicle is legally available to the budget group.
Example: Ms. D. has a vehicle given to her by her father. Her name appears on the owner’s card. The vehicle has a fair market value of $4,100. She states that her father bought the vehicle for her and is currently paying off a car loan that is in his name.
The CAO verifies that there is a car loan against the vehicle, with a principal balance of $3,000. The loan is in the name of Ms. D.’s father.
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$4,100 = Fair market value |
NOTE: The CAO must keep verification of all encumbrances for three years.
Reviewed December 11, 2017. Reissued September 20, 2012; replacing January 31, 2012.