Loan-to-Value (LTV) Ratio

LTV is calculated by dividing the loan amount by the vehicle's market value. A $20,000 loan on a $25,000 vehicle is 80 percent LTV. Higher LTV means greater lender exposure. Loans exceeding 100 percent LTV carry higher rates or may not be approved.

LTV directly affects what deals get funded and at what rate. F&I managers and desk managers need to understand each lender's LTV thresholds when structuring deals, particularly on trades with negative equity or vehicles with inflated pricing relative to book value.