In YT, what should I know about minimum down payment for car loans?

In Yukon, similar to other Canadian jurisdictions, there is no specific federal or territorial law that mandates a universal minimum down payment for car loans. Instead, these requirements are set by individual lenders-including banks, credit unions, and captive finance companies-based on their internal risk assessment and lending policies. These policies consider a range of factors such as the borrower's credit score and history, the specific vehicle's age and value, the proposed loan term, and prevailing market conditions. For example, in 2025, with potential shifts in interest rates and economic stability, lenders may adopt more conservative approaches, preferring larger down payments to mitigate their exposure, especially for higher-value vehicles or extended loan terms.

While 0% down payment options do exist, they are typically offered to borrowers with excellent credit profiles and stable income, and often come with higher interest rates to compensate for the increased risk. A more common expectation for a down payment in the Canadian auto finance market ranges from 10% to 20% of the vehicle's purchase price. Making a substantial down payment is highly advantageous for the consumer: it significantly reduces the principal amount borrowed, resulting in lower monthly payments and a considerable reduction in the total interest paid over the life of the loan. Furthermore, a larger down payment improves your loan-to-value (LTV) ratio, making you a less risky borrower and potentially qualifying you for more favourable interest rates and terms. It also acts as a buffer against negative equity, where you owe more than the car is worth, which is a crucial consideration given vehicle depreciation.

Understanding this matters because your down payment directly influences the overall affordability and total cost of your car loan, impacting both your immediate monthly budget and your long-term financial well-being.