In NB, what should I know about minimum down payment for car loans?

In New Brunswick, and across Canada, there is no specific federal or provincial law that dictates a universal minimum down payment for car loans. Instead, the down payment requirement is entirely at the discretion of individual lenders - including banks, credit unions, and manufacturer finance companies - who assess risk based on a multitude of factors. These factors encompass the borrower's credit history, income stability, debt-to-income ratio, the specific vehicle's age and value, and the desired loan term.

Given current market conditions and projections for 2025, where interest rates may remain elevated and economic caution persists, lenders are often more conservative. This can lead to a preference for higher down payments, particularly for applicants with lower credit scores or for vehicles that depreciate quickly. A significant down payment is highly beneficial for the consumer: it reduces the principal amount financed, thereby lowering monthly payments and the total interest paid over the loan's lifetime. It also improves your loan-to-value (LTV) ratio, making you a less risky borrower and potentially qualifying you for more favourable interest rates.

Why this matters: A strategic down payment not only enhances your chances of loan approval but also significantly impacts your overall financial commitment, helping you build equity faster and save a substantial amount in interest costs. While not a down payment itself, remember that New Brunswick's 15% HST on the vehicle purchase price will also factor into your total cost, which can either be paid upfront or rolled into your financing.