Auto LoansGlossary
LTV (Loan-to-Value Ratio)
The loan amount divided by the vehicle's value, expressed as a percentage.
Lenders prefer LTVs under 100% (you're not borrowing more than the car is worth). LTVs of 110-125% are common when fees, taxes, and warranties are rolled in — these loans typically come with higher rates and a longer underwater period.
Should you care?
Should you care about LTV (Loan-to-Value Ratio)?
When you need it
LTV = loan amount ÷ vehicle value. Lenders use it to size your APR and decide if they need gap insurance. Above 120% LTV means you're significantly underwater.
What it costs you
Every 10% over 100% LTV typically adds 0.5-1.0 points to your APR — about $15-$30/mo on a $25k loan. Putting 10-20% down or trading in equity is the fastest way to drop LTV and qualify for better rates.
Frequently asked
LTV — FAQ
Put it into practice
Where LTV matters on CarSavr.
Referenced in
Where LTV fits in the bigger picture.
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Auto Loans in 2026 — The Complete Guide
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Related terms
Put it into practice