This is an expression used by lenders to assess a risk factor in making an automobile loan. Different lenders have different models or different methods of calculating an LTV model.

If the vehicle is a NEW vehicle then Captive lenders and most banks will use the dealer’s invoice to calculate the LTV model. In these cases the LTV would be based on the Amount Financed minus Backend Products divided by Invoice.

Credit Unions for NEW vehicles would use Factory MSRP to calculate the LTV model. In these cases the LTV would be based on the Amount Financed minus Backend Products divided by MSRP.

If the vehicle is a USED vehicle then all Captive lenders and most banks will use NADA Trade (or similar acceptable industry publication) to calculate the LTV model. In these cases the LTV would be based on the Amount Financed minus Backend Products divided by NADA Trade.

Credit Unions for USED vehicles would use NADA RETAIL (or similar acceptable industry publication) to calculate the LTV model. In these cases the LTV would be based on the Amount Financed minus Backend Products divided by NADA RETAIL.

On most of the bank rate sheets I have posted in the Bank Rate pinned topic, each bank/lender has their particular method of calculation posted.