By Michael Manashirov, COO of Qollateral
Published March 2026 | 5-Minute Read
Loan-to-value, or LTV, is a common term in many different sectors of lending. Some people might already have experience with it if they took out a mortgage on their home, while others might find it a newer concept. LTV is important because it helps lenders determine how much someone can borrow against an asset when applying for a loan. Borrowers need to understand how it works because it not only helps them estimate the amount of their loan but also helps them make smarter borrowing decisions.
Key Takeaways
- Loan-to-value (LTV) is the percentage of the asset’s wholesale liquid value that the lender is willing to loan.
- Most collateral loans have LTVs between 50% and 75%, depending on the asset and lender.
- The formula is simple: LTV = (Loan Amount ÷ Asset Value) x 100
- Higher LTV means more cash up front. Lower LTV comes with less risk for the lender and gives them a little more wiggle room.
- Factors that affect LTV include: brand, condition, documentation, and resale demand.
- Understanding how LTV works helps the borrower estimate loan offers and negotiate more effectively.
All About LTV: How it Applies to Luxury Asset Lending and Other Basics
Luxury asset lenders use LTV to assess risk. Unsecured loans, like those one would take out at a bank, rely on the borrower’s credit history and personal finances to determine the loan amount and other terms. Secured loans (also called loans against collateral) are backed by an asset, like a house, a high-end watch, or an expensive designer handbag.
That’s where LTV comes in. It tells the lender how much they can safely and comfortably loan out to the borrower. It takes a bit of nuance, as the value of certain assets can change over time based on factors such as overall demand, the condition of the asset, and market trends. Nevertheless, LTV is an excellent tool for both the lender and the borrower.
Common luxury assets:
So, what is loan-to-value, anyway?
To put it simply, the loan-to-value ratio is the percentage of an asset’s overall market value that a lender is willing to loan. Higher LTVs mean more money borrowed but more risk for the lender. Lower LTVs come with less risk and more wiggle room if the lender needs to sell the asset later to repay the loan.
Most luxury collateral loans have LTVs from 50% to 75%. That number varies, depending on the lender and the asset. So, for example, if someone pledges a $10,000 watch as security for a loan with 70% LTV, the loan amount will be $7,000.
Here’s how the Loan-to-Value Ratio formula works:
LTV = (Loan Amount ÷ Asset Value) x 100
Or
Loan Amount = Asset Value x LTV%
Below are a few realistic examples of how to calculate loan-to-value:
Rolex GMT Master II Batman ref. 116710BLNR
- Appraised value: $15,000
- Loan: $10,500
- LTV: 70%
Diamond Tennis Necklace
- Appraised value: $25,000
- Loan: $15,000
- LTV: 60%
Hermès Birkin Bag
- Appraised value: $40,000
- Loan: $30,000
- LTV: 75%
Calculating the loan-to-value beforehand is helpful because it gives the borrower a realistic idea of how much they can qualify for. These amounts will always vary, which we will dive a bit deeper into below.
Why LTV Matters for Luxury Collateral Loans
LTV directly affects how much someone can borrow and possibly even the loan terms and interest rates. As we stated above, secured loans rely on an asset. The borrower retains ownership throughout the loan. However, if they stop making payments for any reason, the lender will sell the asset to cover the loan.
A lower LTV protects the lender in those instances if they need to resell the asset. On the other hand, higher LTVs provide the borrower with more liquidity up front.
It’s important to find a lender, like Qollateral, with the knowledge and proper industry connections to provide the highest, most competitive LTVs.
Factors That Affect LTV Ratios for Luxury Assets
Lenders don’t have a set LTV. It varies based on several different factors, like:
- Brand prestige: Rolex, Patek Philippe, Hermès
- Market demand and how easy the asset is to resell
- Overall condition
- Box, papers, original purchase receipts
- Provenance
- Authentication
- Market volatility
- Lender-specific policies
At Qollateral, most LTVs fall within the 60% to 75% range, depending on the asset. Our team is always willing to work with clients to help them secure the highest possible offer.
How to Maximize Your LTV Ratio
There are things borrowers can do to help maximize LTV. For starters, keep assets in excellent condition. That means storing them properly and, if possible, keeping the original box and papers. Original packaging can significantly add to an asset’s value, depending on the asset.
When building a collection, choose assets from more well-established, in-demand brands like Tiffany & Co., Vacheron Constantin, or Hermès. These brands are more likely to fetch a higher offer if the owner ever needs to use them to secure a cash loan. It also helps to time a loan to coincide with strong demand. For example, alongside popular industry releases like Watches & Wonders or shows like Paris Fashion Week.
TIP: If you’re unsure about timing or other ways to maximize LTV, consult a specialist, like Qollateral.
Common LTV Questions and Misconceptions
Is Higher LTV Always Better?
Not always. It might mean more cash up front, but that also means more risk for the lender.
Why Don’t Lenders Offer 100% LTV?
Lenders need a cushion. That gap between, let’s say, 75% and 100% helps cover costs like market changes or fees if the borrower defaults on the loan and the asset needs to be sold.
Can LTV Change Over Time?
Yes. Market conditions and asset values can shift, changing how much a lender can comfortably offer for the loan.
Is LTV the Same Across all Lenders?
No. Each lender approaches risk and LTV differently.
Comparing LTV Across Collateral Types
Below are a few examples of different types of asset classes and common LTVs:
- Mortgages: 80% – 97%
- Auto loans: 80% – 110% (over 100% means the borrower owes more than what the car is worth)
- Watches: 60% – 75%
- Jewelry: 50% – 70%
- Handbags: 60% – 75%
Use LTV Knowledge to Your Advantage
LTV is an excellent tool for borrowers. It gives them a general idea of what to expect, including loan amounts and how to get the best offer, before they even meet with a lender.
At Qollateral, we change how people access liquidity. We want to help you maximize the value of your assets with the most competitive loan offers and LTVs. Our loans are fast, safe, and completely confidential.
Contact us today to set up a free, no-obligation appraisal.
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