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In NT, what should I know about trade-in tax benefit for car loans?
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Car Loan Glossary • nt

In NT, what should I know about trade-in tax benefit for car loans?

In the Northwest Territories, the trade-in tax benefit for car loans is straightforward and highly advantageous due to the absence of a provincial sales tax (PST). When purchasing a vehicle from a dealership in NT, you are exclusively subject to the 5% federal Goods and Services Tax (GST). Crucially, the GST is calculated on the *net price* of the vehicle, meaning the purchase price after the value of your trade-in has been deducted. For example, if a new vehicle is priced at $40,000 and your trade-in is valued at $15,000, you will only pay 5% GST on the remaining $25,000, rather than the full $40,000. This mechanism directly reduces the total tax payable, which in turn lowers the overall amount you need to finance through a car loan. This matters immensely to consumers as it translates into tangible savings, decreases the principal amount of the loan, and ultimately results in lower monthly payments, making vehicle ownership more affordable. This federal GST application of trade-in benefits is a consistent advantage across Canada, distinguishing it from provinces where PST rules on trade-ins can vary, and remains a valuable financial strategy for buyers navigating the 2025 automotive market.

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