Subprime Auto Finance LTV Training - F&I School Lesson - YouTube

If the lender declines or counters your  subprime customers for a particular vehicle,  

that doesn't mean that they won't finance them for  any vehicle. The lender may simply want less risk.  

That's where your LTV sheet comes into play. Take  a quick look at your LTV sheet and find a vehicle  

that has a higher ACV then check with the lender  to see if this better LTV vehicle will turn their  

decline or counter into an approval. How do you  build the LTV sheet? Well popular dealership  

softwares, one example would be vAuto, do this  for you. They typically have a way to sort by  

highest to lowest ACV value, or your sales manager  may already keep such a list that you can use. If  

your dealership does not have the software and  your sales manager does not keep such a list,  

it may be up to you to book out each  car find the value and build your own

First thing you'll see on this side is a  chart it's going to list a stock number,  

your make of the vehicle, your model of your  vehicle, your sale price & your book out. And  

then over here you'll have an LTV calculator  which can help you determine the LTV if you  

don't want to you know use your brain power  at that moment. Okay so let's do an example:

We're gonna put a stock number in let's say  it's...it doesn't matter what it is but let's  

say it's a Ford Escape. Let's sell it for how  about $14,995. Now we've got to get our book  

out right? Our book out goes right there. Our book  out is the ACV, the actual cash value of the car,  

the market value of the vehicle okay? And the  way most dealerships get that, most banks prefer  

you to get that is by using NADA retail or loan  values. So we're going to go over to Dealertrack  

which does all of our book outs for us. We're  going to enter the options on the car. It has fog  

lights, navigation, parking & keyless entry. Or  to click "calculate" and it's going to give us the  

NADA trade value, which is $12,300. So now that we  have that, we can go over & we can put our $12,300  

right there. Now our book outs already in there,  $12,300 and our Amount Financed. How do we get  

our Amount Financed? Now the number one mistake  students make with this LTV sheet is they assume  

the Sale Price is the Amount Financed. That's  two different things okay? But how do we get  

our Amount Financed? Well you're going to use your  dealerships DMS software, whatever it is. In this  

case we're going to be using Dealertrack, okay?  We're going to take our sale price of $14,995.

Let's say our customer's putting a $1,000  down. Now after taxes and fees and so forth  

their amount financed comes to $15,432. That's  when you add $14,995, $1,199.50 for taxes,  

$237.50 for fees and then you take away the $1,000  down you get $15,432 for your Amount Financed.  

So over here $15,432 and you'll  see our LTV calculation is 125%.  

Again your bookouts $12,300, your amount financed  $15,432 and your LTV calculation is 125%.  

Now some of you may be asking "Well why did  they include the sale price in here if it's not  

included in the chart? Why not just put the amount  financed in this in this column right here?"

Well the answer is simple. Because depending on  what the customer's putting as a down payment,  

depends on what the amount financed is. For  example this customer had a $1500 trade with  

this vehicle. Now the amount financed is $13,812.  You have to go back over here...$13,812 and now  

the LTV is 112%. It's a big difference, it's a  13% difference. So it wouldn't make sense to put  

the amount financed in this column because it's  going to change for each and every customer. How  

much money they're putting down, whether there's  a trade, whether there's negative equity etc. So  

the point of putting the sale price and the book  prices, you can quickly see whether you're going  

to be in a good equity position regardless  of how much the customer is putting down.

For example:

This Jeep Grand Cherokee: the sale price is  $19,900 and the book is $20,100. So as long as  

the customer is putting down enough money for  taxes and fees, you're going to be under 100%  

because the book is more than what you're  selling it for. So you already know that  

the bank's gonna like this car. As  long as a customer can afford it,  

as long as their income's high enough,  the bank's gonna like this car because  

the value of the car when they drive off a lot  is more than what they owe the bank. So if the  

bank had to repossess it, if they had to take it  back, if it we're to get into an accident, they're  

definitely going to get their money back okay?  And that's the real importance of this LTV sheet.

You're going to want to put cars  on here that either book for more  

than you're selling them OR look  close to what you're selling for.

For example: $12,300 book and $14,995  sell price that's pretty close especially  

considering if a customer is  putting a $1000 or $2000 down  

you're gonna be almost even okay?  All right hopefully that makes sense.  

If you have any questions feel free to put  a comment down below and we will explain  

further. But otherwise go ahead and download  this free LTV sheet right below this video.