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What is LTV car loan?

What does LTV mean for a car loan?

Nicholas Hinrichsen - Published: September 18, 2020

LTV is a financing term used in home and auto loans which tries to compare the Value of the Asset (car or home) to the outstanding loan. As a very simple example - if a car is worth $10,000 and a customer wants a loan for $9,000 the LTV would be 0.90 or since this is typically described in percentage terms it would be 90%.

The obvious question for most car loans is "who determines the value"? in the LTV calculation. For homes, a professional appraiser normally comes around to determine the value of the home. For cars its much easier and an in person appraisal isn't required. Instead, lenders typically use "book values". The most commonly used values are Kelly Blue Book and Black Book values. NADA guides are also used in some cases. It should be noted, it may be difficult to match your cars appraisal to the same value the lender is using.

This is because lenders typically use a "lending value" from KBB which is not immediately viewable to the consumer. The KBB "Lending Value" is normally slightly lower than the retail values consumers see. Furthermore, if you are getting a loan - ensure the lender has appropriately checked off any packages and options that the car has which may add value to the appraisal. Through raising the "Value" part of LTV, you are more likely to get your loan approved.


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