How does the vehicle’s make and model impact the loan terms and approval?

The make and model of a used car can greatly influence the loan approval process and terms. The make and model inform lenders on resale value, reliability, and risk that will affect your loan.

Generally lenders prefer vehicles from trusted manufacturers, those that drive a good resale value. Lenders believe that popular vehicles are safer bets therefore it is more likely that you will be approved with better interest rates and higher loan to value ratios.

Lenders see risks associated with lesser-known brands, knock off or discontinued models, and vehicles with limited service networks. Those vehicles carry the likelihood of being harder to maintain and sell or bad resale value, therefore lenders will:

• Give you a lower loan to value ratio meaning down payment will be larger.
• Charge a higher interest rate to reflect the considered risk.
• Extend more stringent eligibility criteria or deny financing completely on certain makes and models.
• The age, mileage and overall condition of the vehicle also matter. Newer and in better condition with lower mileage will ultimately get approved for the most favourable terms.

When purchasing a used car, it is worth considering how any aspects of the make/model may ultimately affect your loan options. A vehicle that is simply popular and has been maintained properly could not only improve your chance of being approved, but better terms overall.