How does the bank determine its loan-to-value ratio for car loans?

I want to buy a car with tons of extras, but they don't show up on car value estimators. I know the bank uses these values to determine if I can buy the car. How do they determine the loan-to-value ratio?

Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Calculating your car’s loan-to-value ratio (LTV) is an important step in securing a
car loan
. Here’s how lenders do it. First, they check with the National Automobile Dealers Association (NADA) to determine the actual cash value (ACV) of your vehicle.
Then, they’ll take the loan amount requested and divide by the ACV to get the LTV. Lenders like to see LTVs of 100% or less. If the LTV is above 100%, you’re asking for more money than the car is worth, at least according to the lender’s appraisal.
If you have a car with tons of extras that don’t show up in the ACV, you may still be able to get the loan amount you request—even if your loan-to-value ratio is higher than 100%. Many lenders will offer 120% LTV loans for qualified buyers. Usually, you’ll need a great credit score to qualify.
If you manage to secure the loan, make sure your sweet new ride is properly protected with a full-coverage insurance policy. Download the
app to compare dozens of competitive quotes and find the best rates in your area.
View full answer 
Jerry partners with more than 50 insurance companies, but our content is independently researched, written, and fact-checked by our team of editors and agents. We aren’t paid for reviews or other content.

Join 4M+ members in lowering their car insurance

Easiest way to compare and buy car insurance

No long forms
No spam or unwanted phone calls
Quotes from top insurance companies
Find insurance savings