Understand the road tax game before buying a car! Which will be more beneficial: lifetime or 5 years?
Buying a new car? So, pay attention not just to the model and mileage, but also to the road tax! Many people are confused about whether paying a lifetime tax or a 5-year plan is better. A slightly wrong choice could be a huge blow to your pocket. Find out which tax will truly benefit you: lifetime or 5-year.
Buying and owning a car is a dream for many. However, besides fulfilling this dream, buying a car also comes with a significant financial burden. Over its lifetime, a car incurs expenses in the form of maintenance, fuel, insurance, and taxes.
When purchasing a car, the owner can choose to pay lifetime taxes or pay taxes for five years. This can be a difficult task for many.
Lifetime or 5-Year Road Tax
Many people believe that lifetime tax is the best option because they don't have to pay taxes repeatedly. The question now is: should you pay lifetime tax or five-year tax?
Let's explain it in detail so you can understand and make an informed decision. For most private car owners who plan to keep their vehicle for a long period, such as 10 years or more, paying lifetime tax (LTT) is generally a better option, as it saves costs in the long run.
points Lifetime Tax (LTT) 5 Year Tax (Periodic)
Duration Valid for the entire life of the vehicle (usually up to 15 years) Valid for 5 years only, then has to be refilled
Cost A large one-time payment, but cheaper in the long run Lower initial costs, but the total cost over 15 years could be higher
Convenience Once you pay your taxes, there are no further worries; no deadlines, no penalties. Taxes need to be renewed every 5 years, missing the deadline may attract a penalty
Resale Value The car fetches a higher price as the next owner does not have to pay taxes Resale value is slightly lower, as the next owner will have to pay taxes again
Transferability If you shift to another state, you have to pay prorata tax there and get a refund from your old state – the process is a bit complicated Lower tax payability provides flexibility, especially beneficial for those with transferable jobs
Who is better among the two
Additionally, this eliminates the hassle of periodic renewals and improves the resale value of the vehicle if sold within the 15-year period. If you plan to keep the car for a longer period, such as more than 10 years, choose lifetime tax.
Also, if you want to avoid frequent road tax renewals and want to stay in the same state where the original registration was made, choose this option.
On the other hand, if you plan to sell the car within a few years after purchase, or your job is transferring and you plan to move to another state soon, then opt for the 5-year tax.