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

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

In Saskatchewan, when you trade in your existing vehicle towards the purchase of a new or used car at a licensed dealership, you benefit from a significant tax advantage. The 6% Provincial Sales Tax (PST) is applied only to the *net price* of the vehicle - meaning the agreed-upon purchase price minus the trade-in allowance. This provincial policy directly reduces the taxable amount, providing a substantial saving.

This nuance is crucial for consumers, as it effectively lowers the total amount you need to finance, resulting in smaller monthly payments and less interest paid over the life of your car loan. For instance, trading in a vehicle worth $10,000 on a $30,000 purchase means you only pay PST on $20,000, saving you $600 in PST. This consistent benefit helps offset vehicle costs, especially in the current economic climate impacting affordability, and distinguishes Saskatchewan from provinces like Ontario or Alberta where provincial sales tax (or GST only) is applied to the full purchase price regardless of a trade-in.

References:

Related Topics: province sk topic

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