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Glossary Term

Loan-to-Value (LTV)

The financed amount as a percentage of the equipment's value.

All glossary terms

In short

Loan-to-value (LTV) is the financed amount expressed as a percentage of the equipment's value. A lower LTV means more of your own money is in the deal and less risk for the lender.

How LTV is calculated

Divide the amount financed by the equipment's value to get the LTV:

  • Financing $80,000 on a $100,000 asset is an 80% LTV.
  • A lower LTV means a bigger down payment and more equity in the deal.
  • A higher LTV means you're financing more of the purchase.
  • Lenders use LTV alongside credit and cash flow to gauge risk.

Why it matters

LTV influences your approval odds and your rate. A lower LTV reduces the lender's exposure, which can improve terms and make approval easier. A higher LTV preserves your cash but may require stronger credit or a higher rate. Balancing LTV is really about deciding how much equity to put into the asset versus keeping it as working capital.

Common questions

What's a good LTV for equipment financing?

It varies by lender, asset, and profile. A lower LTV (more money down) generally improves your terms, but many strong applicants finance a high percentage of the value.

Does a lower LTV get me a better rate?

Often, yes — less lender risk can mean better pricing. It's one factor among credit, time in business, and the asset itself.

General information only. This page is educational and does not constitute financial, legal, or tax advice. All financing is subject to credit review and lender approval. Rates, terms, and eligibility vary by applicant, asset, and lender, and are not guaranteed. Any figures or examples are illustrative. Please speak with a qualified advisor about your specific situation.