Loan-to-value (LTV)
LTV is the ratio of your loan balance to your car's current market value, expressed as a percentage.
What it means
Loan-to-value is your remaining loan balance divided by the vehicle's current wholesale or retail value, depending on the context. If you owe $18,000 and the car is worth $20,000, your LTV is 90%. An LTV above 100% means you are upside down: you owe more than the car is worth. Lenders use LTV to gauge risk because a high ratio means they cannot recover the full loan amount by repossessing and selling the vehicle.
Why it matters
LTV determines whether you can refinance, how much equity you can tap if you sell, and whether you need gap coverage. Most refinance lenders cap LTV at 125%, and many prime lenders stop at 110%. If you are at 140%, you will struggle to refi until you pay down principal or the car appreciates. When you sell or trade, positive equity (LTV below 100%) gives you cash or trade-in value; negative equity means you write a check or roll the shortfall into a new loan.
What to do
Check your payoff balance, then look up your car's current value on our market pulse page to calculate LTV. If you are over 100%, our sell or keep tool helps you decide whether to ride it out or pay down the gap before trading.
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