Could someone define LTV?

[JHowell1976]

That's all. There seem to be other words that I can't find a definition for but I can't recall them at the moment.

[MarvBear]

LTV=Loan to Value

 

 

from my standpoint usually expressed as a percentage figure.

 

It may be expressed as a % of Line 3 or Line 6 on the retail installment contract.

[TomKC]

Loan = Amount you are borrowing (principal)

Value = MSRP (on a new car, blue book or some other value on a used car)

 

Take the loan amount and divide it by the value

 

So, let's say you're buying a car with a sticker of $30,000 and you're total principal amount is $33,000 (because of taxes, negative equity, GAP insurance, extended service contracts, and prepaid maintenance), your LTV is $33,000 divided by $30,000 or 110%. In other words, you're upside down on this car before you even drive it off the lot and put mile one on it.

[MarvBear]

Loan = Amount you are borrowing (principal)

Value = MSRP (on a new car, blue book or some other value on a used car)

 

Take the loan amount and divide it by the value

 

So, let's say you're buying a car with a sticker of $30,000 and you're total principal amount is $33,000 (because of taxes, negative equity, GAP insurance, extended service contracts, and prepaid maintenance), your LTV is $33,000 divided by $30,000 or 110%.  In other words, you're upside down on this car before you even drive it off the lot and put mile one on it.

<{POST_SNAPBACK}>

 

 

TomKC. that is an inaccurate assessment of LTV.

[msbeanctr]

Loan:to:value = what percentage of the loan you can borrow, i.e., $20,000 car and you are required a 10% downpayment (2000) that is a 90% LTV.

 

$20,000 car, you are required a 15% downpayment (3000) you are at 85% LTV, so on and so forth, same for mortgages

 

[MarvBear]

Loan:to:value = what percentage of the loan you can borrow, i.e., $20,000 car and you are required a 10% downpayment (2000) that is a 90% LTV.

 

$20,000 car, you are required a 15% downpayment (3000) you are at 85% LTV, so on and so forth, same for mortgages

 

<{POST_SNAPBACK}>

 

also incorrect.

[Marty716]

LTV=Another way for finance companies to make more money off you!

[msbeanctr]

The loan-to-value (LTV) ratio is probably the most important of the 3 underwriting ratios. The loan-to-value ratio is defined as:

LTV Ratio = Total Loan Balances (1st mtg+2nd mtg +3rd mtg) / Fair Market Value of the Property

 

Take out mortgage and put in car......

[MarvBear]

The loan-to-value (LTV) ratio is probably the most important of the 3 underwriting ratios. The loan-to-value ratio is defined as:

LTV Ratio = Total Loan Balances (1st mtg+2nd mtg +3rd mtg) / Fair Market Value of the Property   

 

Take out mortgage and put in car......  

<{POST_SNAPBACK}>

 

 

We dont do it that way on retail installment contracts.

[TomKC]

TomKC.  that is an inaccurate assessment of LTV.

 

Gee, why not educate us instead of just telling us we're wrong then.

[TomKC]

Not that I'd be surprised, but I guess LendingTree's Definition is wrong then?

[MarvBear]

I thought I did a little education in the 2nd post in this thread.

 

However, for those that need a bit more clarification, I arbritrarily picked a lender who advances 105% of MSRP/Retail.

 

For the sake of you trying to figure it out MSRP is $25,000.00. I scanned and will show it below. The loan meets the guidelines of a 105% advance TO THE PENNY on line 3.

 

[TomKC]

Marv,

 

That contract looks like an F&I guy's dream (life and diability insurance for almost $3,500 ... etch for $449 ... GAP for $495 ... service contract ... road hazard ... the only thing missing is prepaid maintenance).

 

However, I'm still confused ... line 3 on that contract is the net amount with tax and after down payment ... it's much higher than 105% of a $25,000 MSRP. Line 6 as a percentage of Line 1 is pretty close to 105%, though not to the penny it looks like.

[MarvBear]

Marv,

 

That contract looks like an F&I guy's dream (life and diability insurance for almost $3,500 ... etch for $449 ... GAP for $495 ... service contract ... road hazard ... the only thing missing is prepaid maintenance).

 

However, I'm still confused ... line 3 on that contract is the net amount with tax and after down payment ... it's much higher than 105% of a $25,000 MSRP.  Line 6 as a percentage of Line 1 is pretty close to 105%, though not to the penny it looks like.

<{POST_SNAPBACK}>

 

MSRP = $25,000.00

 

25000 X 1.05 = 26,250.00

SALES TAX 1.930.33

DEALER FEE 499.00

____________________________

LINE 3 SUBTOTAL 28.679.33 IN BALANCE TO THE PENNY! That is a 105% approval.

[TomKC]

Gotcha, don't some lenders include add-ons like extended warranties and such in the LTV requirements (which obviously this lender does not), or did I just misunderstand? I know my Cap1 Auto approval had an LTV limit of 115%, then they mentioned what were allowable backend add-ons, like GAP and extended warranty, did they mean they could be added on over and above the LTV then?

 

Is that a real contract? how did the sale price get so much above the MSRP, dealer installed accessories?

[MarvBear]

Gotcha, don't some lenders include add-ons like extended warranties and such in the LTV requirements (which obviously this lender does not), or did I just misunderstand?  I know my Cap1 Auto approval had an LTV limit of 115%, then they mentioned what were allowable backend add-ons, like GAP and extended warranty, did they mean they could be added on over and above the LTV then?

 

Is that a real contract?  how did the sale price get so much above the MSRP, dealer installed accessories?

<{POST_SNAPBACK}>

 

Not a real contract, for example purposes only.

 

Line 6 on the installment contract is not normally conditioned except by sub prime lenders. If they do condition line 6 it is usually around 140-150%.

 

Each bank we use will have their own particular set of guidelines, but the one I posted above is generally how they are calculated.

 

The loan to value is usually not inclusive of tax or any other backend add-ons. It may or may not necessarily include the dealer fee.

 

Backend products are cancellable, therefore usually they are seldom limited to any great extent.

 

I do have some banks that will advance 140% on line 3 with all the backend one can muster.