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

Loan-to-Value (LTV) in Yukon, as with all Canadian provinces and territories, is a fundamental metric lenders use to assess the risk of a car loan. It is calculated by dividing the total loan amount (including any applicable taxes, fees, and extended warranties rolled into the financing) by the vehicle's appraised or market value. Lenders establish LTV caps to protect their investment, ensuring the loan amount doesn't significantly exceed the asset's worth, especially given potential depreciation.

Typically, for new vehicles, LTV caps might range from 100% to 120%, allowing for the inclusion of sales tax and other charges. However, for used vehicles, especially older models or those with higher mileage, lenders often impose stricter LTV caps, sometimes as low as 80-90% of the vehicle's fair market value. These caps are consistently applied by Canadian financial institutions, including those serving the YT market.

This matters significantly to you as a consumer in Yukon because it directly dictates your required down payment. If your desired loan amount surpasses the lender's LTV limit for the specific vehicle, you will be required to pay the difference upfront as a down payment. In the 2025 market, with lenders maintaining a cautious approach due to economic conditions, understanding LTV is crucial for securing loan approval, managing your finances, and avoiding negative equity where you owe more than the car is worth. A lower LTV generally signals less risk to the lender, which can sometimes lead to more favourable interest rates and loan terms.