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

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

In Quebec, when you trade in your old vehicle at a dealership towards the purchase of a new or used car, you benefit from a significant tax advantage specifically related to the Quebec Sales Tax (QST). Unlike the federal Goods and Services Tax (GST), which is generally applied to the full purchase price of the new vehicle, the QST is calculated only on the net price - that is, the price of the new vehicle after the value of your trade-in has been deducted. This provincial regulation effectively reduces the taxable base for QST, directly lowering the total amount of provincial sales tax you pay. For consumers, this translates into a tangible saving on the overall cost of the vehicle, which means a smaller amount to finance through a car loan. This reduction in the principal amount can lead to lower monthly payments and less interest paid over the life of the loan, a particularly valuable benefit in the 2025 market environment where interest rates may remain elevated. Understanding this provincial nuance is key to maximizing your savings when financing a vehicle in Quebec.

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