Got a AUTO loan i need LTV Ratio help?

[jayfico1]

So i want to buy a car thats 25,000... I Got approved by a credit union for 39,000 and a LTV rate of 90%. The Market Value of the car i want is 50,000. What does this mean? Thanks all in advance.

[Remember0]

LTV is Loan-to-Value. In other words, what percent of a car's value you can borrow.

For new cars, LTV typically equals MSRP. For used cars, finance companies typically use KBB or NADA values.

In your case, you can borrow up to $39k. However, you cannot borrow more than 90% of a car's value. So if the finance company's methodology also values the car at $50k, then you can borrow the lower of $39k or $50k*.9=$45k. So therefore, you can only borrow $39k against a $50k car.

[jayfico1]

WOW. This really helps thanks.

[Anonymous]

While most of Remember0’s answer is correct...when it comes to LTV. The only point in which I differ is the fact that LTV is based off of MSRP. Most Lenders base their LTV calculations off of Invoice and not MSRP when it comes to new. Some also calculate LTV off of Invoice-Rebates. When it comes to pre-owned LTV it is calculated from NADA/KBB clean trade in value or Black Book Clean Finance Advance.

There are some lenders (mostly Credit Unions) that base their LTV off of NADA Clean Retail.

I would be skeptical to purchase a vehicle with a “Market Value” (That’s a very broad term with many possible values) of $50,000 and only paying $25,000 for the vehicle unless you are putting $20,000 to $25,000 down. There is no reason for the dealer to sell something so far below “Market Value” when they could get more from taking it to the Auction.

If you have any other questions please feel free to ask!