The Approved Loan Amount used in calculating LTV is not a finalized variable.  It is the value at the time of the evaluation - specifically, after the Loan Amount Matrix and Custom Rules.

 

How To Calculate LTV

LTV is calculated by dividing the Approved Loan Amount by the Vehicle Value.

 

Approved Loan Amount / Vehicle Value = LTV

 

For example, if the Approved Loan Amount is $30,000 and the Vehicle Value is $25,000, then the LTV is 120%.

 

$30,000.00 / $25,000.00 = 1.20

 

Applying the LTV Cutoff

The LTV Cutoff is the maximum LTV allowable for an application.  When the LTV exceeds the LTV Cutoff, the Approved Loan Amount must be reduced.  The new Approved Loan Amount is the product of the LTV Cutoff and the Vehicle Value.

 

LTV Cutoff x Vehicle Value = Approved Loan Amount

 

For example, if the LTV Cutoff is 110% (or 1.10) and Vehicle Value is $25,000, then the Maximum Loan Amount is $27,500.

 

1.10  x  $25,000.00 = $27,500.00

 

Thereafter, the Term and Rate are assigned and an Estimated Payment Amount is calculated.  This information is required to calculate DTI and PTI.

 

Loan-To-Value Cutoff Calculation Method

There are several options for the LTV calculation method used to determine the Maximum Loan Amount.  If the selected method subtracts an add-on amount, then the Maximum Loan Amount is calculated by first finding the maximum amount per (Vehicle Value x LTV Cutoff), then adding the value of the add-ons to get the Maximum Loan Amount.

 

For example, if the LTV Cutoff is 110% (or 1.10), and the Vehicle Value is $25000, and the add-ons total $3000, then the Maximum Loan Amount is $30,500.

 

                                                 (LTV Cutoff x Vehicle Value)+ Add-Ons Amount = Maximum Loan Amount

 

                                                 (1.10 x $25,000) + $3000 = $30,500

 

 

 

See also: LTV Cutoff Process Flow

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