What does the loan-to-value rate on a car loan mean?
"I'm trying to get a car loan. My lender told me one of the various factors that go into my approval is the loan-to-value ratio?
What does a loan-to-value ratio mean?"
Answer provided by
Answered on May 28, 2021
“As the name implies, a loan-to-value ratio is how much the loan amount is divided by the cash value of the vehicle.
A good loan-to-value ratio is 100% or less. This means that you won’t be upside-down when you finally sign for a car loan.
In most cases, the maximum loan-to-value ratio you can have to get approval is 125% to 130%. Any more than that, and you’re likely to get declined.”
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