Loan-to-Value Ratio

Loan-to-value ratio is a loan amount divided by the value assigned to its collateral or financed asset.

Why this matters to income investors

Higher borrowing relative to collateral value can reduce the cushion available after default.

How to use loan-to-value ratio in your research

Read the borrower or issuer disclosures for collateral, payment priority, covenant terms, and missed payments. Then check how a deterioration could reduce interest income or the value available to support future dividends.

This material is general education and information, not individualized investment, tax, or legal advice.