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In NL, what should I know about loan-to-value (LTV) for car loans?
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Car Loan Glossary • nl

In NL, what should I know about loan-to-value (LTV) for car loans?

In Newfoundland and Labrador, Loan-to-Value (LTV) for a car loan is a critical metric calculated by dividing the total loan amount by the vehicle's appraised or market value, which lenders use to assess their risk exposure. A higher LTV indicates less borrower equity and greater potential loss for the lender if the loan defaults. Across Canada, including NL, lenders typically cap LTVs, often allowing up to 100-120% for new vehicles to cover the vehicle's MSRP, the 15% provincial HST, and other associated fees like registration and warranties. However, used vehicles generally face lower LTV caps due to their faster depreciation and higher inherent risk. As we look towards 2025, economic conditions may lead to more conservative lending practices, potentially tightening these LTV thresholds. For you, the consumer, understanding LTV is paramount: a lower LTV, usually achieved through a substantial down payment, significantly improves your chances of loan approval, helps secure a more favourable interest rate, reduces your monthly payments, and critically, protects you from negative equity, ensuring you're not underwater on your vehicle from the outset.

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