Claim Interest on Car Loan? Unlock Savings (2026)
Confused about car loan interest claims? Discover simple steps to potentially save money on your taxes. Learn how today!
Are you considering financing a vehicle in 2026 and wondering if you can claim interest on your car loan? You're not alone. Many Australians are exploring ways to reduce their financial burden, and claiming interest could be a potential solution. Let's dive deep into the details to see if this is an option for you.
Understanding Claiming Interest on a Car Loan
In Australia, the ability to claim interest on a car loan depends largely on the purpose of the vehicle. If the car is used for business purposes, you may be able to claim the interest as a tax deduction. This means that if you're self-employed or use your vehicle significantly for work-related travel, you might be eligible for some tax relief. However, if the car is solely for personal use, unfortunately, you cannot claim the interest.
It's important to differentiate between personal and business use. The Australian Taxation Office (ATO) requires clear evidence of business use, so maintaining accurate records of your vehicle's usage is crucial.
Current Market Information: Interest Rates, Requirements, and Options
As of 2026, interest rates for car loans in Australia vary depending on several factors including credit score, loan term, and lender policies. Generally, you can expect rates to range from 6.49% to 12%.
To qualify for a car loan, you'll need to meet certain eligibility criteria:
- Be at least 18 years old
- Have a stable income source
- Possess a decent credit score
- Provide proof of identity and residence
- Show evidence of financial stability
With Esteb and Co's access to over 83 lenders, you have a wide array of options to find a car loan that suits your needs. Here's a brief comparison of typical loan offerings:
| Lender | Interest Rate | Loan Term |
|---|---|---|
| Lender A | 6.49% - 8.5% | 3 - 5 years |
| Lender B | 7% - 9.2% | 2 - 7 years |
| Lender C | 7.5% - 10% | 1 - 5 years |
Steps to Claim Interest on a Car Loan
If your car is used for business purposes and you're eligible to claim interest, follow these steps:
- Keep meticulous records of your vehicle's business use. This includes maintaining a logbook that details every trip, its purpose, and the kilometres travelled.
- Calculate the percentage of car use for business versus personal purposes.
- At the end of the financial year, determine the total interest paid on your car loan.
- Apply the business use percentage to the total interest paid to calculate the claimable amount.
- Include this deduction in your tax return under work-related car expenses.
Tips and Considerations
Here are some expert tips to maximise your potential deductions:
- Maintain Accurate Records: Always keep your receipts and invoices related to car expenses.
- Consult a Tax Professional: If you're unsure about your eligibility or the claim process, consulting with a tax advisor can provide clarity and ensure compliance.
- Consider the Loan Type: Some loan types may offer more favourable terms for business use. Discuss your options with a broker at Esteb and Co to find the best fit.
- Review Annually: Reassess your vehicle's business use each year to adjust your claims accordingly.
Frequently Asked Questions
- Can I claim interest on a personal car loan?
No, interest on a car loan can only be claimed if the vehicle is used for business purposes.
- How much of the car loan interest can I claim?
You can claim the portion of the interest that corresponds to the business use percentage of the vehicle.
- What documentation do I need to claim car loan interest?
You need a detailed logbook of the vehicle's business use, loan statements showing interest paid, and evidence of business use, such as invoices or work contracts.
- Does the type of car loan affect my ability to claim interest?
The loan type itself doesn't affect eligibility, but certain loans may have conditions that impact business usage claims. Always check with your lender or broker.
- Can Esteb and Co help me find a suitable car loan for business purposes?
Yes, with access to over 83 lenders, Esteb and Co can assist in finding a loan that fits your business needs.
- Are there any tax implications for claiming car loan interest?
Yes, claiming interest affects your taxable income and it's vital to comply with ATO guidelines to avoid any issues.
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With direct experience helping Australians secure home loans, car finance, and business funding, Ricky founded Esteb and Co to bring transparency and technology to mortgage broking.