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

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

Loan-to-Value (LTV) for car loans in Prince Edward Island, as across Canada, represents the ratio of the total loan amount to the vehicle's appraised market value. Lenders meticulously cap LTV to manage their risk, ensuring the collateral (the car) provides sufficient security for the loan, especially considering potential depreciation or default. While new vehicles might see LTVs up to 100-120% - allowing for the financing of taxes, fees, and sometimes even negative equity from a trade-in - used vehicles typically have lower caps, often closer to 80-100% of their wholesale or retail value, depending on the lender and the borrower's credit profile. This matters significantly to you as a consumer because a higher LTV cap can reduce your required down payment but simultaneously increases your monthly payments and the risk of being "upside down" on your loan, where you owe more than the car is worth. In the current 2025 Canadian market, with potentially tighter lending conditions, understanding your LTV is crucial for securing loan approval and managing your financial exposure, particularly given PE's 15% HST which

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