What Is Car Finance?
Car finance is a type of loan specifically for purchasing a new or used car. It can be secured against the value of the vehicle, or unsecured – depending on the lender and how much you borrow. Car finance allows you to spread out the cost of your car over an agreed length of time, making it more affordable than paying the full amount upfront.
You can apply directly with a bank, building society, online car finance provider, or dealership. To help you decide which option is right for you, consider factors such as interest rates and repayment periods.
What Expenses Can You Deduct?
In general, you cannot claim car finance payments directly on your taxes. However, it’s not impossible to pay less tax on your car. Some related expenses may be deductible. This includes interest payments that are made on any loans taken out for the purchase or lease of a vehicle. Additionally, if you use your car for business purposes, such as delivering packages or giving ridesharing services, then you may be able to deduct some of your car expenses.
How To Claim Deductible Expenses
When claiming deductible expenses on your taxes related to car financing, it is important to keep careful records and documentation. All paperwork needs to be properly filled out and filed correctly with all supporting documents included (such as proof of loan agreement or sales contract). Additionally, any applicable receipts for fees associated with securing financing should also be kept on file and included with your return when filing taxes each year.
Final Thoughts
While taking out a loan for car finance can be expensive, it’s important to remember that there are some potential tax deductions available that can help offset some of those costs across multiple years’ returns.
Making sure that all receipts and other relevant documents are kept and maintained throughout the course of ownership can help ensure that when it comes time to file taxes each year all necessary forms are completed accurately with all eligible claims considered.
Related guide: Can you claim van finance on your tax return?
