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?"

“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.”
Eric Schad
Answered on May 28, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.

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