Zero-Emission Incentives in Canadian car loans refer to government programs, such as the federal iZEV program and various provincial initiatives (e.g., BC's CEVforBC, Quebec's Roulez vert), designed to make eligible electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) more accessible. These incentives typically reduce the effective purchase price of the vehicle, either as an upfront discount applied by the dealership at the point of sale or as a post-purchase rebate, directly impacting the amount a borrower needs to finance.

For Canadian borrowers, understanding these incentives is critical for accurate financial planning and ensuring transparency in their auto loan. While the incentive directly lowers the principal amount being financed, it's crucial to note that provincial sales taxes (PST/HST/GST) are generally calculated on the vehicle's *pre-incentive* price, meaning the tax component of the loan might be higher than anticipated if only considering the post-incentive price. Lenders are legally obligated to provide clear disclosure, detailing how the incentive is applied to the total financed amount, the true principal, and consequently, the total interest paid over the loan term. As we approach 2025, with increasing ZEV mandates and market penetration, these incentives remain a significant factor in reducing the overall cost of ownership, leading to lower monthly payments and substantial long-term savings on interest, making it imperative for consumers to scrutinize their loan agreements for proper credit and accurate tax calculations.