Loan-to-Value (LTV)

What is Loan-to-Value (LTV) Ratio?

Loan-to-value (LTV), a term used by lenders, is an evaluation of the risk associated with approving a loan. Its simple definition is the ratio of the loan's value to the collateral's value.

The LTV in conventional collateral-based lending is a gauge of investor risk. The higher the LTV, the higher the lender's risk. Therefore, the borrower will pay a greater interest rate as it is higher. The LTV in loans backed by cryptocurrencies ensures timely full repayment, lowering investor risks. Your LTV ratio is a technique for you, the borrower, to assess your risk. Your LTV risk might be somewhere between 5% and 70%, depending on the platform you choose.