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

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

Loan-to-Value (LTV) for a car loan in Nunavut, as across Canada, is the ratio of the amount you borrow to the vehicle's appraised market value, expressed as a percentage. Lenders cap LTV, typically between 100% and 120% for new vehicles and often lower for used ones, to manage their financial risk and protect against potential losses if the vehicle depreciates or if the borrower defaults. A lower LTV, usually achieved through a substantial down payment, indicates less risk to the lender and can lead to more favourable interest rates and approval terms. In the current Canadian market heading into 2025, lenders are generally more conservative due to economic conditions and higher interest rates, which might translate to stricter LTV requirements across the board. While Nunavut doesn't have specific LTV regulations, the standard Canadian lending practices apply, with vehicle valuation potentially considering local market nuances like higher transportation costs that can affect market value. For consumers, understanding LTV is crucial because a high LTV means you're borrowing a significant portion of the vehicle's value, increasing your required down payment, potentially leading to higher interest rates, and raising the risk of being 'upside down' on your loan if the vehicle depreciates faster than you pay it off.

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