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

In PE, student borrowers often face unique challenges when applying for car loans due to limited income and a nascent or non-existent credit history. Lenders perceive this as higher risk, especially in the current 2025 market with elevated interest rates, making approval more difficult without strong mitigating factors. To overcome this, a co-signer - typically a parent or guardian with a stable income and robust credit - is frequently required to secure approval and more favourable interest rates. Alternatively, providing a substantial down payment can significantly reduce the loan amount, thereby lowering the lender's risk and improving your chances. Students must be particularly wary of extended loan terms, such as 84 or 96 months; while these offer lower monthly payments, they result in significantly more interest paid over the loan's lifetime and increase the risk of negative equity, where you owe more than the car is worth. Understanding these implications is vital to protect your developing credit score, avoid long-term financial strain, and ensure you can comfortably manage not only the loan payment but also essential costs like insurance, fuel, and maintenance in Prince Edward Island.

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