In general, loan terms can be very confusing and complicated. Luckily, Diamond Banc believes in complete transparency and wants to make the loan process as simple as possible to understand.
What is LTV?
LTV otherwise know as “loan to value” is the amount borrowed versus the amount Diamond Banc is willing to loan. The difference between these amounts may be large or negligible depending on each situation. Sometimes, your high-end jewelry may be valued at much more than you were looking to take out in a a loan.
How Does Loan to Value Ratio Work?
For example, Diamond Banc may value your diamond ring at $20,000 initially. However, your medical bill may be $10,000, and you were only looking to take out $10,000 in a loan. Therefore, the value of your collateral is greater than the actual loan amount.
When the collateral is worth more than the loan amount, the loan is considered more secure. This is because the Diamond Banc’s risk in the loan is lower. For example, someone has a Rolex valued at $17,000 and they want the full $17,000. The, the loan would be less secure because Diamond Banc is risking more by lending the full value.
Therefore, if your loan to value ratio is bigger (meaning you take out less than your item is worth) the loan rate will be less expensive. This means you will not need to pay as much interest each month to have a more secured loan.
Have any more questions about loan to value ratios? Get in touch with the experts at Diamond Banc who can answer any of your jewelry equity loan questions!
Overall, if you’re planning to get a loan using your engagement ring as collateral, Diamond Banc is great to work with! Get started today
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