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

In Quebec, student borrowers seeking car loans must understand that their limited verifiable income and often nascent credit history present a higher risk profile to lenders. In the current 2025 market, where interest rates may still be elevated, financial institutions rigorously assess a borrower's ability to repay. Consequently, securing a strong co-signer, typically a parent or guardian with established credit and stable employment, is frequently essential for approval and to access competitive rates. A substantial down payment, often 10-20% or more of the vehicle's price, also significantly strengthens an application by reducing the loan principal and the lender's exposure. While longer loan terms (e.g., 72-96 months) might offer lower monthly payments, they dramatically increase the total interest paid over the life of the loan and heighten the risk of negative equity, where the car's value depreciates faster than the outstanding balance. It is crucial for students to budget comprehensively, factoring in not only the loan payment but also mandatory insurance (which can be higher for young drivers), fuel, and maintenance, to ensure responsible borrowing and to effectively build a positive credit history.

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