This Auto Loan to Value (LTV) calculator helps you determine the ratio of your loan amount to the car’s value. The LTV ratio is a key factor that lenders use to assess the risk of lending.

Formula

LTV Ratio = (Loan Amount / Car Value) × 100

Example Calculation

If the loan amount is $20,000 and the car value is $25,000, the LTV ratio is 80%. This means the loan covers 80% of the car’s value.

Why It Matters

A higher LTV ratio indicates higher risk for the lender, which may result in higher interest rates or denial of the loan.

Smart Strategy

Keep the LTV ratio below 80% to get the best interest rates. The lower the ratio, the less risk the lender assumes.

FAQs

What is a good LTV ratio? A lower LTV ratio (below 80%) is considered better as it reduces the risk for lenders.

Can I get a loan with a high LTV ratio? It’s possible, but you’ll likely face higher interest rates or be required to purchase private mortgage insurance (PMI).