The full value of one motor vehicle is exempt as a resource to a budget group if the equity value of that vehicle is less than $40,000. If only one vehicle is owned, and the equity value is equal to or greater than $40,000, the CAO will count the equity value as a resource.
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 that has a fair market value of $50,000 and they owe $7,000. The budget group is not entitled to an exemption as the equity value is $43,000 and over the vehicle limit of $40,000.
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.
Even if the loan for the vehicle is in another person’s name the loan amount is still deducted when determining the equity value of the vehicle belonging to the budget group.
If the budget group owns one motor vehicle and the equity value is less than $40,000, no further action is needed. The motor vehicle is an excluded resource.
If a budget group owns more than one motor vehicle and all vehicles are determined to have an equity less than $40,000, the CAO will exclude the vehicle with the greatest equity value and count the equity value of the other vehicle(s).
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.
$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.
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.
$4,100 = Fair market value -3,000 = Loan principal balance $1,100 = Equity value |
If more than one vehicle is owned and the equity value of each vehicle is less than $40,000, enter the data on the Vehicles screen and exempt the one vehicle with the higher equity value and count the equity value of any others.
If more than one vehicle is owned and the equity value of one vehicle is equal to or greater than $40,000 and other vehicles are less than $40,000, the vehicle that has an equity value greater than or equal to $40,000 will count as a resource. The vehicle with an equity value less than $40,000 will be exempt.
Example: Vehicle 1 – 2000 Toyota Corolla
Fair Market Value = $900
No need for further verification of amount owed since the equity value is below $40,000.
Vehicle 2 – 2017 Honda CR-V
Fair Market Value = $45,000
Verified Amount Owed = $5,000
Equity Value = $45,000 - $5,000 = $40,000
*Vehicle 1 would be exempt, and Vehicle 2 would be counted as a resource.
If more than one vehicle is owned and the equity value of each vehicle is equal to or over $40,000, do not exempt any vehicle and count the equity value of all vehicles as a resource.
Revised August 28, 2020, replacing September 20, 2012.