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In ON, what should I know about student borrowers for car loans?
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In ON, what should I know about student borrowers for car loans?

For student borrowers in Ontario seeking car loans, the primary challenge stems from limited verifiable income and a nascent credit history. Lenders in 2025, operating in a higher interest rate environment, view this as elevated risk, often leading to more stringent approval criteria. Consequently, securing a loan typically necessitates a strong co-signer, usually a parent or guardian with established credit and stable income, who assumes equal responsibility for the debt. Alternatively, a substantial down payment can significantly improve approval chances and potentially lead to more favourable interest rates by reducing the loan-to-value ratio. Without these, students may face higher interest rates or be offered longer loan terms to make monthly payments affordable, which, while reducing immediate burden, significantly increases the total interest paid over the life of the loan and the risk of negative equity. It's crucial for students to budget not only for the loan payment but also for mandatory Ontario HST, insurance (which can be very high for young drivers), fuel, and maintenance, as these ancillary costs can quickly become overwhelming. Understanding these dynamics empowers students to prepare adequately and make informed financial decisions.

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