loan value definition

loan value

Amount a lender will lend against an asset used as a collateral to secure the loan. Generally, lenders accept only that asset as a collateral which has an appraised liquidation value at least 25 percent higher than the loan amount (to cover liquidation and other charges in case of a foreclosure). The difference between the market value of a collateralized asset and the amount of loan advanced against it called haircut.

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