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What is LTV car loan?
Nicholas Hinrichsen - Published: September 15, 2023
What does LTV mean for a car loan?
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.undefined
Haven't explored refinancing yet? Take a look at our exhaustive article about all the auto refinance companies and you will realize, WithClutch.com is the only fully digital platform that lets car owners like you do so from the comfort of their own home. No need to set a foot in a bank or credit union. You can lower your rate or get cash in as little as 20 seconds.
Follow three simple steps to refinance your auto loan, get approved in seconds and save thousands in minutes.
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.undefined
Haven't explored refinancing yet? Take a look at our exhaustive article about all the auto refinance companies and you will realize, WithClutch.com is the only fully digital platform that lets car owners like you do so from the comfort of their own home. No need to set a foot in a bank or credit union. You can lower your rate or get cash in as little as 20 seconds.
Follow three simple steps to refinance your auto loan, get approved in seconds and save thousands in minutes.
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