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What's the definition of loan-to-value ratio?

I've been researching car loans and I keep seeing the term loan-to-value ratio. What does this mean?

avatar
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
Researching the terminology of
car loans
 is a good idea—you want to know what you’re signing up for!
A loan-to-value ratio is the amount of the loan you requested compared to the value of the car you want to buy. This rate should be 100% or less, which means the amount you want to borrow is equal to or less than the cost of the car.
Some lenders may approve loans for more than the value of the vehicle so you can use the extra funds to upgrade your car or pay off other debt. This is usually only available to borrowers with exceptional credit and high income.
Once you’re ready to insure that new (or new-to-you!) car, don’t leave money on the table by failing to shop around for car insurance. With the
Jerry
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MORE:
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