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

In Ontario, there is no specific provincial or federal law that mandates a universal minimum down payment for car loans. Instead, minimum down payment requirements are determined entirely by individual lenders - including banks, credit unions, and captive finance companies - based on their comprehensive risk assessment policies. These policies take into account several key factors: the applicant's credit score and history, the specific vehicle's age, value, and depreciation rate, and the overall loan-to-value (LTV) ratio. For instance, a prime borrower financing a new vehicle might qualify for a zero-down payment, whereas a higher-risk applicant or one purchasing an older, higher-mileage used car could be asked for 10-20% or more down to mitigate the lender's exposure.

This matters significantly to consumers because a strategic down payment directly impacts the affordability and long-term cost of your loan. A higher down payment reduces the principal amount borrowed, resulting in lower monthly payments and less total interest paid over the loan's term. Furthermore, it substantially reduces the risk of negative equity - a situation where you owe more than the vehicle is worth, which is particularly relevant in the dynamic market conditions anticipated for 2025. A substantial down payment also strengthens your loan application, potentially securing a more favourable interest rate and improving your chances of approval, especially if your credit profile isn't perfect.