Loan-to-Value Ratio (LTV)

When calculating a vehicle’s loan-to-value (LTV) ratio, the amount of money borrowed is divided by the vehicle’s market value.

Credit risk is reduced when you have more equity in your vehicle, or a lower loan-to-value (LTV). In order to determine your vehicle’s equity, LTV is used. LTV is calculated by dividing the $17,000 loan by the $20,000 value, so if you bought a Honda Civic sedan for $20,000 USD with a $3,000 down payment and financed $17,000, your LTV is around 85%.

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