LOAN-TO-VALUE (LTV)
ELEMENT #3

Loan-To-Value is the Maximum Amount a Lender will Loan (i.e. Allow you to Borrow) on a Vehicle Based upon the Vehicle's Book Value. As a result, your Car Loan Request &/or Approval CAN NOT exceed this Dollar Amount.

(Note: Most lenders will allow additional products or services to be added to the Maximum LTV Amount. Examples: Credit Life & Disability Insurance, Warranty/Service Contracts and GAP/Debt Cancellation Agreements.)

To determine this amount, you will complete Five Functions in this area. They are:

1) Determining Your Credit Quality.
2) Determining the Vehicle's Total Purchase Price.
3) Determining the Vehicle's NADA Value. (Kelley Blue Book Value for West Coast States.)
4) Determining Maximum Loan-To-Value.
5) Analyze the Results.



1) DETERMINING YOUR CREDIT QUALITY

Knowing at least One of your Credit Bureau Scores will be Helpful in this Area. To determine your Credit Quality &/or Lender Group, Refer to the following "Credit Quality Chart".

If you Do Not know your Credit Score(s) and want to Purchase One or All Three Credit Bureau Scores: (Click)




- OR -

SIMPLY BE HONEST with Regard to Your Credit Quality.

- OR -

Use the Less than Perfect Credit Lender Calculation (below) to determine Maximum Loan-To-Value (LTV).

2) DETERMINING THE VEHICLE'S TOTAL PURCHASE PRICE

Determining the Vehicle's Total Purchase Price can be a Little Confusing when Tax, Title Fees, Licenses Fees, Documentation Fees, Rebates and a Trade-In (with or without a Payoff) are involved. To assist you in determining the Vehicle's Total Purchase Price, Three Helpful Work Sheets are provided below.

Vehicle's Total Purchase Price -- No Trade-In     (click: "Helpful Work Sheet")

Vehicle's Total Purchase Price -- With a Trade-In and No Pay-Off Balance     (click: "Helpful Work Sheet")

Vehicle's Total Purchase Price -- With a Trade-In Possessing a Pay-Off Balance     (click: "Helpful Work Sheet")

3) DETERMINING THE NADA/KELLEY BLUE BOOK VALUE

Determining the Vehicle's NADA/KELLEY BLUE BOOK Value is Very Simple. You will Need the Vehicle's:

• Year
• Make
• Model
• Mileage
• Equipment

(Note: The Vehicle's Identification Number [i.e. VIN] is also helpful but not required. However, some Lenders may require the VIN prior to Loan Completion in "STEP 2. Direct Lender Access".)

If you do not know the above information about the vehicle or simply are unsure of what type of vehicle you want to purchase, the NADA &/or Kelley Blue Book Web Site will allow you to obtain the Value of Almost Any Vehicle for FREE!

Based Upon Your Credit Quality, Determine the Following:
("Links" to NADA & KELLEY BLUE BOOK provided Below.)

    NEW Vehicles

        Good Credit Quality: MANUFACTURER'S INVOICE VALUE

        Less than Perfect to Bad and No Credit Quality: MANUFACTURER'S INVOICE VALUE

    USED Vehicles

        Good Credit Quality: NADA/KELLEY BLUE BOOK CLEAN RETAIL VALUE

        Less than Perfect to Bad and No Credit Quality: NADA/KELLEY BLUE BOOK AVERAGE TRADE-IN VALUE

IMPORTANT NOTICES

• "Clicking" a Link below, will Re-Direct you to NADA's or Kelley Blue Book's Official Web Site and a "New Window Will Open". WHEN FINISHED, simply "CLOSE" the "Window" to RETURN HERE and CONTINUE.

• In addition to Vehicle Values, both web sites may contain links to 3rd Party Advertisements &/or Offers. You are STRONGLY ADVISED to Avoid 3rd Party Links.

• The Car Loan Professor Saves You Money by providing FREE DIRECT ACCESS LINKS to Avoid 3rd Party Middlemen who Cost You Money.

(Click) "NADA VALUE"

(Select: "Consumer" then "New Car Prices" or "Used Car Prices" to Obtain Values)

You must "Print" or "Write Down" the NADA Value.

(Click) "KELLEY BLUE BOOK VALUE"

(West Coast States Only)

(Select: "New Car" or "Used Car" to Obtain Values)

You must "Print" or "Write Down" the Kelley Blue Book Value.

        A) Good Credit Quality/Lenders = 135% of Manufacturer's INVOICE (NEW Vehicles)

                                                                 135% of NADA/KELLEY CLEAN RETAIL Value (USED Vehicles)                   

                                                                 INCLUDING: Tax, Title, Licensing and Documentation Fees

                (click: "Helpful Work Sheet" NEW & USED Vehicles)
                
                Examples:

                MANUFACTURER'S INVOICE X 1.35 = $MAXIMUM LTV AMOUNT
                (NEW Vehicles)
                
                NADA/KELLEY CLEAN RETAIL VALUE X 1.35 = $MAXIMUM LTV AMOUNT
                (USED Vehicles)
                

        B) Less than Perfect, Bad, & No Credit Quality/Lenders = 115% of Manufacturer's INVOICE (NEW Vehicles)

                                                                                                        115% of NADA/KBB AVE. TRADE-IN (USED Vehicles)

                                                                                                        PLUS: Tax+Title+Licensing+Documentation Fees

                (click: "Helpful Work Sheet" NEW Vehicles)

                (click: "Helpful Work Sheet" USED Vehicles)

                Examples:

                MANUFACTURER'S INVOICE X 1.15 = $MAXIMUM LTV AMOUNT + TAX + TITLE + LICENSING + DOC. FEES
                (NEW Vehicles)

                NADA/KBB AVE. TRADE-IN X 1.15 = $MAXIMUM LTV AMOUNT + TAX + TITLE + LICENSING + DOC. FEES
                (USED Vehicles)


(IMPORTANT NOTICE: Maximum LTV Percentages MAY VARY from Cars to Trucks to SUVs resulting in Higher or Lower Car Loan Values. Consult Lender for Details.)

TOTAL PURCHASE PRICE OF THE VEHICLE  -VS-  MAXIMUM LOAN-TO-VALUE (LTV) AMOUNT

IF the Total Purchase Price of the Vehicle (Including Tax, Title, License and Documentation Fees) is LESS THAN OR EQUAL TO the Maximum Loan-To-Value (LTV) Amount:

YOUR TOTAL PURCHASE PRICE IS ACCEPTABLE.

(Apply For The Total Purchase Price On Your Car Loan Application.)

CONTINUE TO: (Click) ELEMENT #4. PAYMENT-TO-INCOME (PTI)

IF the Total Purchase Price of the Vehicle is MORE THAN the Maximum Loan-To-Value (LTV) Amount, you have Three Options:

• Offer the Seller of the Vehicle a Total Purchase Price that is NO MORE THAN the Maximum Loan-To-Value (LTV) Amount. Complete a Credit Application using the Maximum LTV as the Amount of your Car Loan.

• Use a Cash Down Payment &/or Trade-In to REDUCE the Total Purchase Price of the Vehicle to the Maximum Loan-To-Value (LTV) Amount. Complete a Credit Application using the Maximum LTV as the Amount of your Car Loan.

• Choose a Similar or Different Vehicle with a Total Purchase Price that is LESS THAN or EQUAL TO the Maximum Loan-To-Value (LTV) Amount. (Important Notice: If this Option is chosen, you must obtain a NADA/Kelley Blue Book Value for the Similar &/or Different Vehicle and Repeat the Maximum LTV calculations.)

NOW CONTINUE TO: (Click) ELEMENT #4. PAYMENT-TO-INCOME (PTI)