If you’re thinking about buying a car, it’s important to know the loan to value (LTV) ratio. This number tells you how much of a down payment you’ll need to make. There are two main ways to calculate LTV: the absolute method and the percentage method. The absolute method uses the value of your car as your starting point. Then, you subtract any outstanding loans on the car, such as a loan from your bank or a loan from a private party. The percentage method uses your monthly payments and the interest rate on your loans to come up with an LTV figure. whichever calculation method you choose, make sure that it’s accurate for your situation. If you’re planning on buying a car with cash, use the absolute method. If you have some money saved up but want to use a low-interest credit card, use the percentage method. And finally, if you’re borrowing money from someone else (like a bank), use either calculation method—the results will be pretty similar. ..
