A Loan To Value Auto Calculator

A Loan To Value Auto Calculator

A loan to value auto calculator is highly useful for comparing the amount of the loan to the value of the asset that will be bought. 

For Travis, who is buying his first car, finding a loan to value auto calculator will be highly useful. He can use it to work out the ideal amount he should save as deposit in order to get the best possible car finance deal.  

It involves the division of the loan amount by how much the car is worth. This is then expressed in percentage form. 

In any loan transaction, the lender wants to avoid risk as much as possible. Collateral comes in the form of the asset, so if a borrower doesn’t pay, then the asset is repossessed and sold in order to recoup the costs. 

Prior to approving any loans, the loan to value auto calculator is used by the lender to work out the level of risk involved. 

Maximum LTVs can be set, which ensures that financiers are not taking too much risk on. 

To reduce the LTV, then you can borrow less money or simply pay a deposit. 

Travis can use the calculator to work out which rate will mean that he will be considered the lowest possible risk to lenders. If he can afford to pay more than 20% of the loan upfront, he will effectively be considered to be a low risk borrower. This is likely to mean that he will pay less overall because he will be paying a lower total loan amount. His classification as a low risk borrower may also qualify him for lower interest rates. If he is purchasing a R100 000 car, it will be best for him to pay a deposit of more than R20 000 to benefit from the best rates.

Categories: Financial tips