LVR (Loan-to-Value Ratio)
LVR (Loan-to-Value Ratio) is the percentage of an asset’s value that a lender is willing to finance. It’s calculated by dividing the loan amount by the asset value.
LVRs are used across Equipment Finance, Vehicle Finance, Business Loans, and Low Doc Asset Finance.
Why It Matters
LVR determines how much money you can borrow and how much deposit (or equity) you need. A lower LVR usually means:
- easier approvals
- lower risk for lenders
- better rates
- stronger servicing outcomes for Low Doc applicants
High LVRs may require stronger financials or additional security.
How It Works
Formula: LVR = (Loan Amount ÷ Asset Value) × 100
- Loan: $60,000
- Asset Value: $75,000
LVR = 80%
Lenders usually finance:
- 60–100% for vehicles
- 50–90% for equipment (depending on age)
- Up to 100% under Low Doc if asset is strong
For faster approvals, see Fast-Track Asset Finance.
Common Use Cases
- Tradies buying utes, vans, or tools
- Truckies financing prime movers or rigids
- Medical clinics acquiring high-value devices
- Cafés upgrading equipment with Low Doc options
Related Switchboard Resources
ATO guidance on asset values: ato.gov.au
Is a lower LVR better?
Yes — it means lower risk for lenders, stronger approvals, and often better rates.
Can LVR affect Low Doc approvals?
Absolutely. Low Doc lenders rely heavily on LVR since full financials aren’t required.
What happens if the asset value drops?
Your LVR increases, but repayments don’t change. It can affect refinancing options.