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

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

In Nova Scotia, Loan-to-Value (LTV) for car loans represents the ratio of the total amount financed to the vehicle's fair market value, expressed as a percentage. Lenders utilize LTV as a primary risk management metric, setting caps to protect their investment should the borrower default and the vehicle need to be repossessed. While LTV standards are national, typical caps for new vehicles might allow for 100-115% to cover the vehicle price plus Nova Scotia's 15% HST and other fees, whereas used vehicles often have stricter limits, generally 80-100% of their appraised value, reflecting their depreciation and higher inherent risk. For consumers, understanding LTV is paramount: a high LTV, often due to a small down payment or rolling negative equity from a trade-in, signals increased risk to lenders, potentially resulting in higher interest rates, larger monthly payments, or even loan denial. In the 2025 market, with potential economic shifts, lenders may be more conservative, emphasizing the need for a healthy down payment or trade-in equity to meet LTV requirements and secure favorable terms. Ultimately, LTV directly influences your approval chances, the cost of your financing, and your immediate equity position in the vehicle.

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