How does the value of the collateral affect the amount of the loan?

The value of the collateral affects the maximum amount of the loan you can receive. Lenders typically only lend up to a certain percentage of the value of the collateral, which is known as the loantovalue (LTV) ratio. For example, if you have collateral worth $10,000 and the lender has an LTV ratio of 80%, they will typically only lend you up to $8,000. The LTV ratio varies depending on the lender and the type of collateral being used. Generally, the higher the LTV ratio, the riskier the loan, and the higher the interest rate will be.