Car Title Loan Interest Deduction Calculator
300% APR title loans — mostly no, with one narrow exception.
The short answer: The short answer: probably not. Title loans are typically open-end credit secured by a car you already own — not a 'qualified motor vehicle loan' incurred to acquire the vehicle. The deduction requires purchase financing; a title loan borrowed against a paid-off car fails that test. The one exception: a purchase-money loan restructured in qualifying form. Run your numbers below, but verify your paperwork says purchase loan.
New, US-assembled vehicle only
Modified Adjusted Gross Income
Car Loan Interest Deduction
$2,400
✅ You qualify for the full deduction
⚠️ This calculator provides estimates for informational and educational purposes only. It is not tax advice. Results are based on the One Big Beautiful Bill Act (OBBBA) and IRS Schedule 1-A. Consult a qualified tax professional for your specific situation.
Why Title Loans Usually Fail the Test
The OBBBA deduction covers interest on qualified motor vehicle loans — loans taken to buy the vehicle. Title loans are subsequent cash borrowing against existing equity.
- • Purchase financing → qualifies
- • Cash-out title loan on a paid-off car → does not qualify
- • 300% APR should be escaped (refinance or pay off), not deducted
What To Do Instead
If you're carrying title-loan debt, the deduction conversation is the wrong one — local credit unions routinely refinance title loans at 15–30x cheaper rates. A credit-union personal loan to clear the title loan saves more than any deduction ever could.
- • Credit union refinance first, deduction second
- • Then, if you finance your next vehicle properly, that interest does deduct
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Frequently Asked Questions
Can I deduct car title loan interest under the OBBBA?
Generally no — title loans aren't purchase financing, which the deduction requires. Only a loan incurred to acquire the vehicle qualifies.
What if I used a title loan to buy the car?
That would be purchase financing in substance; ensure the loan documents reflect a purchase-money loan. Cash-out borrowing against equity does not qualify.