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

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

In Quebec, Loan-to-Value (LTV) for car loans is the ratio of the total amount financed to the vehicle's appraised value. Lenders utilize LTV as a primary risk management tool, setting caps that typically range from 100% to 120%, though some programs might extend higher, especially for new vehicles. It's crucial to note that the "total amount financed" often includes the vehicle's sale price, the significant 9.975% Quebec Sales Tax (QST), tire duties, registration fees, and any optional add-ons like extended warranties. For consumers, a higher LTV means you're financing a larger proportion of the vehicle's total cost, which can necessitate a larger down payment, potentially lead to higher interest rates due to increased lender risk, or even impact your approval chances. In the 2025 Canadian market, with ongoing economic adjustments and potentially normalizing used vehicle values, lenders in QC may apply stricter LTV limits, particularly on used cars, to mitigate depreciation risk and ensure the loan remains well-secured. Understanding your LTV helps you anticipate your financial commitment and avoid negative equity, where you owe more than the car is worth, especially important for a depreciating asset.

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