Loan to Value Ratio Explained: How Much Can You Borrow Against Your Vehicle?

The loan to value ratio — usually shortened to LTV — is the single number that decides how much you can borrow against a vehicle. It compares the size of the loan with the assessed value of the asset securing it. If you have ever wondered why a lender offers you less than your car is worth, or why two cars that look similar attract very different offers, the answer almost always sits in the loan to value ratio.

This guide explains what LTV means for vehicle loans in Kenya, how to calculate it yourself, how it applies at Aspire, and why a sensible LTV limit protects you as much as it protects the lender.

What is a loan to value ratio?

A loan to value ratio expresses a loan as a percentage of the value of the security behind it. The formula is simple:

LTV = (loan amount ÷ assessed value of the asset) × 100

If a vehicle is assessed at KES 1,000,000 and you borrow KES 500,000 against it, the LTV is 50%. If you borrow KES 600,000, it is 60%. The higher the percentage, the less of the asset's value is left over as a cushion between what you owe and what the vehicle is worth.

Two words in that formula matter more than the rest. The first is assessed: the value used is the one established by a professional valuation, not the price you paid, the price you hope to sell for, or a figure from an online listing. The second is loan: it is the amount advanced to you, not the total you will repay once interest is added.

Why lenders use LTV for vehicle loans

A secured loan is backed by something of value. If the borrower cannot repay, the lender's last resort is the security. But a vehicle is not cash. It loses value with age and mileage, it can be damaged, and turning it into money takes time and incurs costs. A lender that advanced 100% of a vehicle's value would be exposed to every shilling of depreciation from the day the loan was paid out.

LTV is the lender's way of building in a margin for those realities. By lending only part of the assessed value, the lender keeps a buffer that absorbs normal depreciation and the costs of recovery if things go wrong. That buffer is a large part of why a secured loan can rest on the value of an asset as well as on your income, as our guide to secured versus unsecured loans explains.

How LTV works at Aspire

For logbook loans, Aspire lends up to 60% of the vehicle's assessed value, within an overall range of KES 10,000 to KES 1,000,000. You keep using the vehicle throughout the loan. The 60% figure is a ceiling, not a target: the amount actually offered also depends on whether the instalment is affordable for your income, which is assessed separately.

That means two tests apply to every application:

1. The security test — the loan cannot exceed 60% of the assessed value of the vehicle.
2. The affordability test — the monthly instalment must fit comfortably within what your income can carry.

Your offer is the lower of the two. A valuable vehicle does not make an unaffordable loan affordable, and a strong income does not stretch the security beyond its limit.

Worked examples: calculating your LTV

The figures below are hypothetical and are used only to show how the ratio works. Your own offer depends on your vehicle's valuation and your assessment.

Example 1: a family saloon

Example: Wanjiru's car is assessed at KES 800,000. At a 60% LTV ceiling, the most she could borrow against it is KES 480,000 (800,000 × 0.60). She only needs KES 300,000, which is an LTV of 37.5%. Because she is borrowing well below the ceiling, the security test is comfortably met and her offer will be driven by affordability.

Example 2: when the product limit applies first

Example: Otieno owns a vehicle assessed at KES 2,000,000. Sixty per cent of that would be KES 1,200,000, but the logbook loan maximum is KES 1,000,000. In his case the product limit, not the LTV, sets the ceiling, and his LTV at the maximum would be 50%.

Example 3: an older, higher-mileage vehicle

Example: Achieng expected to borrow KES 400,000 against a vehicle she believed was worth KES 700,000. The valuation, which took account of its age, mileage and condition, came back at KES 550,000. The 60% ceiling is therefore KES 330,000. Knowing this in advance — and reading our guide to how vehicle valuation works for a logbook loan — would have helped her plan around a realistic figure.

What does the loan actually cost?

LTV tells you how much you can borrow; it does not tell you what borrowing costs. Aspire's secured products are priced at a fixed 4% per month, calculated flat on the amount advanced, over 6 to 36 months.

Example: a KES 300,000 loan over 24 months. Interest is 4% of 300,000, or KES 12,000 a month, giving KES 288,000 over the term. Total repayable is KES 588,000, or KES 24,500 a month. The application fee and the valuation fee are separate and are set out in your written offer before you sign. Run your own figures on the loan calculator, and see how loan interest rates work for more on flat-rate pricing.

Why a lower LTV protects you, the borrower

It is tempting to see LTV only as a lender's safeguard. In practice, a sensible LTV is one of the strongest protections a borrower has.

You keep equity in your vehicle

Equity is the difference between what the vehicle is worth and what you owe. At a 60% LTV, at least 40% of the assessed value remains yours from the start, and that share grows as you repay. If you ever need to sell the vehicle to clear the loan, a healthy margin makes it far more likely that the sale covers the balance with money left over.

You are less exposed to depreciation

Vehicles lose value every year. A loan close to 100% of the value can quickly leave a borrower owing more than the vehicle is worth — a position sometimes described as negative equity. A lower starting LTV keeps you on the right side of that line.

Smaller loans mean smaller instalments

Because the LTV caps the amount, it also caps the instalment. Borrowing what you need rather than the maximum available is the simplest way to keep repayments comfortable. Our guide to how much loan you can afford walks through that calculation.

It discourages over-borrowing

A lender willing to lend the full value of a vehicle — or more — is not doing you a favour. It is shifting risk onto you. A clear, disclosed LTV limit is a sign of responsible lending.

Does the LTV change during the loan?

Yes, in two directions at once. Each instalment reduces what you owe, which lowers the effective LTV. At the same time, the vehicle continues to depreciate, which pushes it up. With a well-chosen term, repayments normally outpace depreciation and your equity grows over time.

This matters if you later consider refinancing. A new lender will value the vehicle afresh and look at your outstanding balance against that new valuation. Our guide to loan refinancing in Kenya covers when that makes sense.

What affects the value your LTV is based on?

Because the ratio rests on the assessed value, anything that affects the valuation affects how much you can borrow. The main factors are:

• Make, model and year — popular, widely serviced models generally hold value better.
• Mileage — higher mileage usually means a lower valuation.
• Condition — body, interior, tyres, mechanical health and any accident repairs.
• Documentation — a clean logbook in your name, with the record matching the vehicle's chassis and engine numbers. Our guide to the NTSA logbook and lender interest explains how to check this.
• Insurability — the vehicle must be capable of comprehensive cover, which the insurer quotes separately.

A valuation fee applies on secured loans and is set out in your written offer before you accept.

How to borrow well within your LTV

• Start with the purpose, not the ceiling. Work out what you actually need, then check whether it falls under 60% of a realistic value.
• Be realistic about the value. Expect the valuation to reflect the vehicle's condition and market, not what you paid for it.
• Test the instalment against your income. The eligibility checker gives a quick sense of fit before you apply.
• Choose the shortest comfortable term. A shorter term costs less in total and builds equity faster.
• Keep your documents ready. A loan application checklist lists what to gather so a decision can typically follow within 24 hours of complete documents.

The bottom line

The loan to value ratio is a simple percentage with a big influence on your loan. It is calculated on the assessed value of your vehicle, not the price you paid, and for Aspire logbook loans it is capped at 60%. Within that ceiling, affordability decides the final figure. A sensible LTV keeps equity in your vehicle, protects you from depreciation and keeps instalments manageable — so borrow what you need, not the most you can, and read every figure in your written offer before you sign.

Frequently asked questions

What is a good loan to value ratio for a vehicle loan?

Lower is safer for you. Aspire logbook loans go up to 60% of the assessed value, but borrowing only what you need keeps more equity in your vehicle and keeps instalments smaller.

Is LTV based on what I paid for my car?

No. It is based on the assessed value from a professional valuation, which reflects the vehicle's age, mileage, condition and market today.

Why was I offered less than 60% of my vehicle's value?

The 60% figure is a ceiling. Your offer is also limited by affordability, so if a smaller instalment fits your income better, the offer will reflect that.

Does the interest count towards the loan to value ratio?

No. LTV compares the amount advanced with the assessed value. Interest and charges are set out separately in your written offer.

Can I borrow against a vehicle that is worth more than KES 1,666,667?

Yes, but the logbook loan maximum is KES 1,000,000, so above that value the product limit rather than the 60% LTV sets the ceiling.

Will my LTV improve as I repay?

Usually. Each instalment reduces the balance, and with a sensible term your repayments generally outpace the vehicle's depreciation, so your equity grows.