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.

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.

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.

TomKC. that is an inaccurate assessment of LTV.

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

also incorrect.

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

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......

We dont do it that way on retail installment contracts.

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

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

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.

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.

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.

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?

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.