1. What is Loan-to-Value (LTV) Ratio?

The Loan-to-Value (LTV) ratio compares the amount of your auto loan to the value of the vehicle you're purchasing. It's expressed as a percentage and helps lenders assess risk for an 84-month auto loan.

2. How Does the Calculator Work?

The calculator uses the LTV formula:

Where:

• \( Loan\ Amount \) — Total amount being borrowed
• \( Vehicle\ Value \) — Actual value of the vehicle

Explanation: The equation calculates what percentage of the vehicle's value is being financed.

3. Importance of LTV Calculation

Details: LTV is crucial for lenders to determine loan terms. Lower LTV ratios generally mean better interest rates and terms, especially for long 84-month loans.

4. Using the Calculator

Tips: Enter the loan amount and vehicle value in dollars. Both values must be positive numbers. The calculator will compute the LTV percentage.

5. Frequently Asked Questions (FAQ)

Q1: What is a good LTV for an 84-month auto loan?
A: Typically, lenders prefer LTV below 80% for long-term loans like 84-month terms.

Q2: How does LTV affect my auto loan?
A: Higher LTV may require gap insurance and often results in higher interest rates.

Q3: Should I consider down payment in LTV?
A: Yes, down payment reduces the loan amount, which lowers your LTV ratio.

Q4: Are there limitations to LTV calculation?
A: LTV doesn't account for additional fees or negative equity from trade-ins.

Q5: Why is LTV important for 84-month loans?
A: Longer loan terms increase risk of negative equity, making LTV more critical.