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When you’re applying for an auto loan, you’ll have to choose between direct vs. indirect financing. Both will get you to the same place — funding for your automobile purchase — but there are key differences between direct and indirect financing to keep in mind.

With a direct auto loan, you can apply prior to shopping for your car and research numerous loan options to find the most competitive terms. An indirect auto loan, on the other hand, can help you get a loan faster since you’re working with a third party, typically the dealership, to arrange the financing. Whether direct vs. indirect financing is right for you ultimately depends on your preferences and priorities.

Keep reading to learn more on indirect auto loans, direct auto loans, pros and cons of each, and how to to decide which loan option is right for you.

What Are Indirect Auto Loans?

An indirect auto loan is a type of auto loan where the funds are obtained through a third party. With an indirect auto loan, the lender and the borrower don’t have a direct relationship because there’s an intermediary involved in arranging the financing.

Indirect loans are common in the auto industry. For example, when a dealership helps a buyer to obtain financing through lenders in their network, that’s an indirect form of financing.

Recommended: What Is a Balloon Auto Loan?

What Are Direct Auto Loans?

With direct financing, as the name suggests, the borrower goes directly to a lender to get funds. This could be at a bank, credit union, or online lender.

With a direct auto loan, you’d go to a dealership to choose a vehicle and sign purchasing paperwork, and then separately get your loan from your financial institution of choice.

Recommended: Smarter Ways to Get a Car Loan

Direct vs. Indirect Auto Loan Financing

In many ways, these two types of auto loans are similar, but there are key differences.

Similarities

With both direct and indirect auto loans, you’ll pick out a vehicle and obtain a loan to buy the car. In each scenario, you may have loan program choices to make.

The dealership, for example, may offer you a few indirect loan options to consider from different partners in their lending network. There can be indirect used auto loans available, as well as those for new vehicles.

Similarly, lenders can offer more than one loan program for a borrower’s consideration. With direct financing, you also have choices between lenders to mull over as you gather information from more than one lender to decide what’s best.

In both cases, you’ll usually need to make a down payment, either in cash or through a trade-in. You’ll have a principal and interest payment that’s calculated based on the loan amount, interest rate, and loan term. For both loan types, you’d sign loan paperwork and make monthly payments until the loan is paid off, or until you sell or trade in the vehicle.

Recommended: How Much Is My Car Worth?

Differences

With an indirect loan, you’d discuss and obtain financing at the dealership through a lender in their network once you’d selected a vehicle. Meanwhile, with a direct loan, you’d go car shopping as well as car loan shopping.

In other words, with an indirect auto loan, you’d look into financing after you’ve found the car you want from that particular dealership. With a direct auto loan, you could seek financing from a lender either before or after selecting a vehicle, giving you the option to consult with a lender ahead of time to get preapproved. However, you’ll also need to be better versed in auto loan terminology and specifics to look out for.

Recommended: How to Rent Out Your Car

Direct Finance Pros and Cons

Pros of direct financing include the following:

•  You can shop around for rates and terms, choosing what’s right for you from your lender of choice.

•  In some cases, a dealer will mark up the interest rate charged; with direct financing, there’s no intermediary to potentially do that.

•  You are more in control. For example, you can decide how many lenders to consult with and can therefore manage how many times your credit is checked.

Meanwhile, the cons of direct financing include:

•  You need to shop at a dealership for the car and then also need to talk to one or more lenders to secure your loan, which is more time-consuming than handling everything in one location.

•  If multiple lenders check your credit, this could impact your credit score.

•  You’ll need to do the legwork of researching on your own, rather than relying on the dealership finance department’s network of lenders.

Indirect Finance Pros and Cons

Notable upsides to indirect financing include the following:

•  You won’t have to research and check in with multiple lenders, which will save you time.

•  The dealership will coordinate the process, making it more seamless for you.

•  The dealer’s finance department can run your credit for different lenders on the same day, helping to ensure those get counted as only one hard inquiry on your credit.

However, you’ll want to note these downsides, as well:

•  A dealer could bump up the interest rate, making it more expensive for the borrower.

•  The dealer is more in control of the process than with a direct loan.

•  You won’t have the opportunity to shop around to compare multiple loan offers.

Is Private Lender Refinancing a Direct or Indirect Loan?

At some point, you may decide to refinance your car loan, perhaps to try to get a better interest rate or to switch lenders. When you refinance with a private lender, you’re dealing directly with the lender without an intermediary, making it a direct refinance loan. Because you’re financing a vehicle with the title already in your name, you wouldn’t be working with a dealer as you would with an indirect loan.

Recommended: Pros and Cons of Car Refinancing

The Takeaway

When buying a vehicle, you’ll either need to pay cash or apply for an auto loan. A borrower may choose to work with a dealership to get financing through one of the lenders in their network, known as an indirect auto loan. Or, they may get a direct auto loan, where they work directly with a financial institution without a middle party.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

What is indirect financing for auto loans?

With an indirect auto loan, there’s an intermediary between the lender and the borrower, often the finance department at dealerships. The dealership would present the borrower with loan options, ask them to select a loan program, and then complete the loan paperwork there.

What is direct financing for auto loans?

With a direct auto loan, a borrower goes directly to a bank, credit union, or online lender to obtain funds to purchase a car. In other words, there is no third party in between the lender and buyer as there is with an indirect auto loan, where a dealer can serve as an intermediary.

What is the difference between indirect and direct financing for auto loans?

The main difference between direct vs indirect financing is whether or not the borrower works directly with the lender. With indirect financing, there’s an intermediary — often, the finance department at a dealership — that gathers financing offers for a buyer and gets the paperwork signed. With a direct auto loan, the borrower works directly with a bank, credit union, or online lender.

Photo credit: iStock/milorad kravic

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOALR-Q325-085

Your car axle is the rod that connects your wheels together. Standard vehicles have one in the front and one in the rear of the car. It’s critical that your wheels turn properly if your car is going to move, so when your axle is malfunctioning, it’s important to have it repaired or replaced.

On average, replacing an axle will cost between several hundred dollars and $1,200. Front axle replacement cost is about $550 to $740, while back axle replacement cost is typically less, costing $480 to $550 typically.

That said, there are a variety of factors that will influence the cost of repair. Here’s a closer look at axle function, a breakdown of costs, and options for paying for repair or replacement.

Front Axle Replacement Cost Breakdown

The two biggest factors that go into broken axle repair or replacement are parts and labor.

Labor costs vary depending on where you live, but you can generally expect to pay a mechanic somewhere between $75 and $130 per hour. Replacing an axle should take one to three hours, which means you can expect to pay up to about $390 in labor costs at the upper end of the price spectrum. Labor costs for repairs will depend on the complexity of the fix.

The rest of the cost largely comes down to parts. The make and model of your car will determine what types of parts you need. If you have a relatively common vehicle, it will likely be easy to find parts, which can reduce cost. Parts for high-performance or luxury vehicles may cost significantly more.

Another option is aftermarket parts, which are parts not made by the original supplier. These are often cheaper alternatives to brand new parts.

Recommended: Financing a Used Car With Over 100,000 Miles

Get an Estimate

It’s recommended to get several estimates from mechanics to ensure you’re getting a fair price. Understanding average cost is a good start, but you may want to look at online resources, such as Kelley Blue Book’s Repair Pricing tool or Consumer Report’s Car Repair Estimate. These resources allow you to look up the make and model of your car, as well as your address, to get an estimate for repairs in your area. This can give you a more accurate idea of how much you’re likely to pay given your circumstances.

With this figure serving as a benchmark, contact a few local auto shops and ask them for a quote. Compare their answer to the average price for your car to help you determine where to get the best deal.

Once you find a mechanic, be sure to look up reviews to see if previous customers are happy with their service. You may also want to look them up on the Better Business Bureau’s website to see if anyone has lodged any complaints.

Recommended: Alternator Repair and Replacement Costs

How Axles Work

Car axles connect your wheels and use rotational force from your transmission to get your wheels spinning. Most vehicles will only have two axles, which can be classified as “live” or “dead.” A live axle receives power from the engine and propels the car forward. A dead axle does not receive power, however, it still supports the weight of the vehicle.

The front axle may or may not receive power from the engine, so it can be live or dead. Axles typically have four parts: the beam, the swivel pin, the track rod, and the stub axle. They are built to be as sturdy as possible, often made from carbon steel or nickel steel.

The rear axle, on the other hand, is “live,” meaning it helps rotate the car’s wheels and move the vehicle forward. They typically come in two parts, known as half shafts. These are connected by the car’s differential.

Why Do Front Axles Fail?

An axle could fail for a variety of reasons. For example, you might be in a car accident that causes damage to the wheels or undercarriage of the car. Older vehicles might have damage from rusting that causes axle failure.

If you overload your car with too much weight, you can put pressure on the axle that causes it to fail. Also, driving in rough conditions on bumpy roads with potholes, for example, might accelerate wear and tear, causing your axle to eventually break.

Recommended: Suspension Repair and Replacement Costs

Signs It’s Time to Replace Your Front Axle

Watch out for the following signs that could signal your axle needs to be replaced:

•  Vibrations and loud sounds: Look out for vibrations, clanking, and rumbling sounds coming from the underside of your vehicle.

•  Wobbly tires: A broken axle may not hold your wheels on straight, which can cause wobbling.

•  Your car won’t move: If your car won’t move even while your engine is revving, it may be a sign that your axle is broken and isn’t able to receive power.

Preventing Future Axle Problems

You can help prevent axle problems by ensuring that your axles are properly lubricated. Also, check your owner’s manual to see how much weight your vehicle is designed to bear and avoid exceeding that limit. Be extremely careful when driving on rough roads, and avoid bumps and potholes when possible.

Covering the Cost of Axle Repair & Replacement

You can pay for the cost of axle repair or replacement with cash or with financing, including credit cards, personal loans, or refinancing your current car loan.

Cash

Paying with cash is the cheapest option as there are no associated fees or interest payments to be paid. Experts recommend that you keep an emergency fund with three to six month’s worth of expenses to cover unexpected costs, such as a broken axle.

Credit Card

If you don’t have the cash on hand, you may consider using a credit card. However, credit cards are best used when you know you’ll be able to pay your bill in full at the end of every month. If you don’t, you’ll owe interest, which can be up to 20% or more. If you carry a balance from month to month, your interest will compound. In other words, you’ll start to accrue interest on your interest, which can push you further into debt.

Personal Loan

As an alternative to credit cards, you could consider a personal loan for car repairs. Personal loans allow individuals to borrow a lump sum of cash that can be used for almost any reason, including car repair. In return, borrowers agree to repay the loan on a set schedule of regular payments with interest. Interest rates are around 11.5% for personal loans, according to the St. Louis Federal Reserve.

Auto Loan Refinance

Finally, you could also consider refinancing your auto loan to help free up some cash in your budget. When you refinance your auto loan, you pay off your old loan with a new one, ideally one with a lower refinancing interest rate, which saves you money in the long run. You can use your interest rate savings toward other goals, including paying for car repair. You can explore potential savings with a car loan refinancing calculator. Or, if you have equity in your car, a cashout refinance could help free up some funds.

The Takeaway

Replacing a car axle costs an average of $900 to $1,200 including parts and labor. Factors that impact the total price include where you live, what your mechanic charges in labor, and the type of axle your specific car needs. You can finance this car repair with cash, credit cards, a personal loan, or an auto loan refinance.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

Can I drive with a damaged car axle?

Do not drive your car with a damaged axle. If your wheels aren’t in proper alignment, it could make driving very dangerous.

How long does it take to repair or replace a car axle?

In general, it takes between one and three hours to replace a car axle when parts are available. Repairs may take less time.

Are car axles covered under any car warranties?

Powertrain warranties cover the parts of the car responsible for delivering power to the wheels, including the engine, transmission, and axles. If you have a powertrain warranty, your car axles will likely be covered.

Does car insurance cover the cost of axle repair or replacement?

Insurance will only cover the cost of axle repair or replacement if your axle has been damaged in an accident. Insurance does not cover general wear and tear.

Photo credit: iStock/Pornpimone Audkamkong

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOALR-Q325-084

As of September 2025, conditions have improved a bit for buying a used car. Prices have softened at the end of summer, but supply may not be keeping up with demand.

The average price of a used car was $25,512 in early fall of 2025. Some of those cars will need to be financed, and higher interest rates present their own challenge.

Another thing to watch out for is a drop in the quality of trade-ins. Some of these problems are not obvious. It’s never been more important to get the best possible vehicle for your money. Here’s what to look for when buying a used car.

When Buying a Used Car, the Questions Matter

This is not the time for shyness. Bring a friend with you to make sure you stick with your questions. These 12 will help you make a decision.

1. Why Are They Selling the Car?

Listen carefully to the answer and let the prospective seller talk as long as possible. Within the explanation could be important clues as to why they’re offloading this vehicle besides a desire for a new set of wheels.

2. What Is the Value of The Car By the Book?

Don’t rely on the car owner for this answer. You need independent information to help with negotiating. Go to websites like Kelley Blue Book to get a range of value for the car. This is also a prime opportunity to ask how they arrived at the asking price.

3. What Is the Mileage?

Everyone knows that years cause automobile wear and tear. Americans drive an average of 13,596 miles a year, according to the Federal Highway Administration. Do the multiplication. Does the number they give you make sense considering how old the car is?

Recommended: Financing a Used Car With Over 100K Miles

4. How Many Owners Has the Car Had?

Is the car’s current owner the first one? If not, does the seller know how many people have owned it previously? How long has the seller owned the vehicle? If someone is trying to sell a car after owning it for a year or even less time, there might be some big problems.

Recommended: Do You Need Proof of Insurance to Refinance?

5. Do They Have the Title in Hand?

A longtime owner might not be sure of the location of the title. The problem is, a seller might not have the title because there’s an outstanding loan from the bank. A clear title is free of any doubts about the ownership of the vehicle. If the seller has it, you can be certain that someone won’t appear to try to take back the vehicle after you’ve paid for it.

6. Do They Have Service/Maintenance Records?

If the seller doesn’t have records of maintenance for the car, all is not lost. You might be able to obtain the records from an authorized dealer for the vehicle’s make. The bottom line: Cars need regular tune-ups and oil changes. If a vehicle hasn’t been maintained regularly, it could mean you will end up with costly repairs.

Recommended: Refinancing a Car Loan

7. Has the Car Been in Any Accidents?

A dented bumper isn’t a tragedy. But if the car has been in a big accident and needed bodywork or even a new engine, you really need to know that. The repairs might have left lingering problems.

8. Is the Vehicle Under Warranty?

A private seller may possibly not know this. But a dealership will certainly have access to warranty status. If a car is still covered, it could save you money. If you’re working with a dealer, you may be able to buy an extended warranty.

9. Has the Car Ever Been in a Flood?

If the car has been exposed to flooding, it could cause problems with the electrical system. Look out for mold and rust, too. To find out if there is rest, you may need to look at the car’s underbody with a flashlight.

Recommended: What Is a Salvage Title?

10. How Would the Purchase Affect Your Car Insurance Premiums?

Your insurance premiums may go up with this purchase. Insurers look at the age of the car as well as make and model. Get in touch with an independent insurance agent before you close the deal to hear the numbers.

Recommended: Auto Insurance Resources: A Comprehensive Guide to Car Insurance

11. Can You Take the Car for a Test Drive?

Being able to sit in the car and drive it is crucial. A test drive is the only way to find out how the car handles. Plus it will reveal any issues the seller may not be aware of (or is hiding). If a seller refuses to allow a test drive, that’s a bad sign.

12. Can You Take the Car to a Mechanic for an Independent Inspection?

You should only ask this if you’re serious about buying a used car. But if you are, then you should ask – and if you get any pushback, that, too, is a bad sign.

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The Takeaway

With used car prices possibly dropping, it could be time for you to start shopping for a new vehicle, but you need to arm yourself with smart and perceptive questions that drill down on the car’s quality and condition. And it’s essential you listen closely to the answers and proceed with prudence in making your decision.

Sometimes you need a car loan to afford a vehicle, used or new. Refinancing your auto loan has pros and cons to explore.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

How much mileage is too much for a used car?

Typically 100,000 miles is considered a cut-off point for used cars, though some say 200,000 is another limit to consider. Older vehicles often require more frequent maintenance when mileage exceeds 100,000 and things can start to go wrong.

Is it ever a good idea to buy a used car?

Yes, you may get a price break on a sound vehicle without many miles on it. However, If you’re looking at buying a newer used car — models no older than three years in age — you may find that prices are still pretty close to what they sold for when new.

When will used car prices drop?

As of the third quarter of 2025, used car prices were showing signs of a slight, gradual decline but a significant drop is considered to be unlikely in the near future.

Photo credit: iStock/coffeekai

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOALR-Q325-083

Using a car for business purposes can come with significant expenses, but the good news is that many of these costs are tax-deductible. Whether you’re a freelancer, small business owner, or part of a larger company, understanding what you can deduct can help you save money and optimize your financial planning.

Keep reading to learn key car-related expenses that qualify for deductions, the methods for calculating them, and the importance of maintaining accurate records to ensure compliance with IRS regulations.

Why Might You Use a Personal Car for Business?

If you are using your personal car for business purposes such as buying supplies, visiting clients, job site visits, business errands, or attending trade shows, your personal car meets the definition of a business vehicle. (On the other hand, if you need a specialized vehicle like a tow truck or a semi for your work, your personal car most likely won’t do the job.)

Using your personal car for business can save you the cost of having to buy another vehicle. You don’t have to worry about where to keep it, since it already “lives” at your house. And on top of all that, there are some tax benefits.

Can You Deduct Car Expenses When Using a Car for Business?

If you’re using a car for business purposes, some of the expenses you incur are tax deductible. The trick is knowing which expenses are considered qualified expenses for your business.

Because you can only deduct expenses related to the operation of the vehicle for business use and not personal, it can get a little tricky. That’s why there are two ways you can deduct expenses.

The first is by using the standard mileage rate set by the IRS. Keep track of the miles you drive for your business and multiply that times this year’s rate to get your tax deduction.

The other option is to keep track of all expenses you incur with the car and then use the number of miles driven for business versus total miles driven for the year to get the deductible portion.

Deductible Expenses

So what are the tax deductions you can write off if you’re using your own car for business use?

Things like car maintenance and repairs, oil changes, gas, tires, licenses, registration, and depreciation are all deductible expenses. You can also deduct parking fees and tolls, even if you use the standard mileage rate.

Nondeductible Expenses

The expenses incurred while using the vehicle for personal errands or trips aren’t deductible. So if you take a road trip for fun, you can’t write off the gas for the trip.

Also, you can’t deduct your miles from home to work, as that’s considered a personal expense.

To summarize, you can only write off expenses for the time you’re using the car for business.

Recommended: How Do You Categorize Expenses for a Small Business?

Other Considerations

If you’re using your car for business, there are a few other things to consider.

Depreciation

Over time, cars depreciate in value. You might have bought a car for $20,000 a decade ago, but only be able to sell it for $5,000 today. The IRS allows you to depreciate a car used for business. However, note that you must be using your car for business at least 50% of the time to qualify for depreciation.

The two methods for calculating depreciation are the straight line method and the declining balance method. Talk to your accountant to determine which is a better option for your tax situation.

Recordkeeping

The IRS can get pretty strict about checking financial records if any discrepancies or red flags pop up. The best thing you can do to prevent an audit (or make one go smoothly) is to keep accurate records.

Make sure to record all miles you travel for business. There are apps that will track this on your phone. You’ll need to note the starting mileage at the beginning of a new year in case you need to compare business miles to total miles driven.

Also, keep receipts from car maintenance visits, tire purchases, gas, and registration, and enter them into your accounting system under the appropriate category.

Employees Driving Company Cars

Another consideration is if your employees use their own cars for company activities, such as driving from one client to another or running errands for the company. Keep in mind you may be liable for them and their cars during business hours, depending on laws in your state.

Employees may be able to claim deductions for the miles they drive their own cars for business, and many employers reimburse employees for those costs, often on a per-mile basis.

Just like when you use your personal car for business expenses, employees can only claim deductions for the portion of the miles driven that are for business, so they’ll need to record those miles.

Recommended: How to Rent Out Your Car

Qualifying for the Standard Mileage Deduction

If you’d rather use the standard mileage deduction (it may be simpler than keeping track of all your business-related vehicle expenses), you must meet certain criteria, according to the IRS.

You can’t operate five or more cars at the same time (like if you have a fleet of delivery vans). You can’t have claimed a depreciation deduction for the car using any method other than straight-line, and you can’t have claimed the special depreciation allowance on the car.

To employ the standard mileage rate deduction, you must use it in the first year you have the vehicle for your business. After that, you can use the standard mileage rate or actual expenses for deduction.

Recommended: 9 Tips for Buying a Used Car

Current Standard Mileage Deduction Rate

If you use your car for business, charity, medical or moving purposes, you may be able to take a deduction based on the mileage used for that purpose, according to the IRS.

The standard mileage rates for 2025 are:

•  Self-employed and business: 70 cents/mile

•  Charities: 14 cents/mile

•  Medical: 21 cents/mile

•  Moving (military only): 21 cents/mile

Standard Mileage Deduction vs Actual Expenses

The IRS offers two ways of calculating the cost of using your vehicle in your business: the actual expenses or the standard mileage rate method. You can’t do both.

If you want to go the actual expenses route, track what you spend on your car, including lease payments, depreciation, repairs, oil, gas, new tires, and maintenance. For example, if 40% of your driving is for business, multiply your expenses by 40% to get your write-off.

According to the IRS, “You can generally figure the amount of your deductible car expense by using one of two methods: the standard mileage rate method or the actual expense method. If you qualify to use both methods, you may want to figure your deduction both ways before choosing a method to see which one gives you a larger deduction.”

Recommended: Long Term Auto Loans

Where Do You Deduct Business Vehicle Expenses?

Now that you’re on top of recording business-related vehicle expenses, where do you actually get your deduction for using a car for business purposes? If you work with an accountant, she’ll handle it. You’ll just need to provide your receipts for vehicle expenses if you’re claiming actual expenses, as well as your total and business-related mileage.

If you file your own taxes, you’ll record this information on your Schedule C (Form 1040). Line 9 allows you to input expenses for cars and trucks. Section IV of the form will ask you questions about your business use of the car, including:

•  When you first used the vehicle for business purposes

•  How many of the total miles were business-related

•  Whether the vehicle was available for personal use during off-duty hours

•  Whether you or your spouse have another vehicle available for personal use

•  Whether you have evidence to support your deduction

What Expenses Can You Deduct if You Borrow a Vehicle for Your Business?

Driving any car for business — including a borrowed car — entitles you to deduct expenses like maintenance and gas, though you cannot deduct depreciation because you don’t own the vehicle.

Can You Deduct the Purchase of a Vehicle for Your Business?

It sounds appealing to write off the cost of the car on your taxes. But there are some strict rules about this, and whether you’re buying a vehicle for a small business or a large one, you need to learn the ins and outs.

Section 179 Deductions

The IRS Tax Code Section 179 permits businesses to write off qualifying vehicles as business tax deductions.

The total section 179 deduction and depreciation you can deduct for a passenger automobile, including a truck or van, you use in your business in 2025 is $31,300 if the special depreciation allowance applies, or 40% of that if the special depreciation allowance does not apply.

Section 179 Requirements

Any business that purchases, finances, or leases business equipment in 2025 (spending less than $3,130,000) should qualify for the 179 deduction. Qualifying purchases include tangible goods, off-the-shelf software, and business vehicles.

To qualify for the deduction, you must purchase and place your new vehicle into service between January 1, 2025 and December 31, 2025.

Pros and Cons of a Business Buying a Vehicle

If you’re considering using a personal car for business, it’s important to consider the benefits and drawbacks.

Pros of Using Your Own Car for Business

Having one car for two purposes saves money. If you use a car for work and then after work for personal errands, and don’t need more than that, why pay for two separate vehicles?

Also, using your own car for business purposes gives you tax deductions you can take advantage of. They’re a huge perk of using a car for business and pleasure, and can reduce what you pay in taxes.

Another benefit is that your company can cover some of the costs of maintaining and repairing your vehicle. This means less out-of-pocket expense for you personally.

Cons for Using Your Own Car for Business

On the other hand, using any vehicle is an added expense for your business. If funds are tight, this may not be an expense you can afford, especially if you’re helping to cover large repair costs or registration fees.

You’ll also have the headache of tracking miles for business. It’s easy to forget to turn on your tracking app or check the odometer, and then you’ll miss out on those mileage deduction opportunities.

Recommended: How to Get a Lower Car Payment

Ways to Fund the Purchase of a Personal Car for Business

If you’re considering buying a car that you’ll use for business and wonder if you should purchase it through your company, the first question to ask yourself is: Will the vehicle be used only for business? If you plan to use it for personal activities as well, it’s better to buy it yourself than through your business.

Even if you buy the car yourself, you can still deduct those business-related expenses or claim your standard mileage rate.

If you don’t have the cash to pay for a car in your personal checking account, you may qualify for a car loan.

A Word on Refinancing a Car Loan

If you’re looking to save money on your car loan, you may want to consider an auto loan refinance. A refinance could help you lower your interest rate or reduce your monthly payment.

Interest rates rise and fall, so you may be paying far more than you need to on an old loan. If you’ve built your credit since you first took out the loan, you may also qualify for a lower rate. Use an auto loan refinance calculator to find out where you stand.

Before moving forward with car loan refinancing, consider the total cost to refinance a car. You may have to pay an early termination or transaction fee with the old lender, as well as registration or title transfer fees when the loan is approved. If the fees are less than what you’ll save, by all means, consider refinancing.

Recommended: Pros and Cons of Car Refinancing

The Takeaway

Using your car for business can lead to substantial tax savings if you understand and properly utilize the available deductions. Whether you opt for the standard mileage rate or the actual expense method, keeping detailed and organized records is essential to maximize your deductions and stay compliant with IRS regulations.

If you’re looking for other ways to save money on your vehicle, consider refinancing your auto loan. An auto loan refinance could potentially lower your interest rate or your monthly payment. Just keep in mind that if you extend your loan term, you’ll pay more in interest over the life of the loan.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

How can I buy a car for business use?

You can buy a car through your company if you plan to only use it for business purposes. However, if you want to also use it for personal activities, you must buy the car on your own. You can still deduct business expenses for the miles you drive for qualified business activities.

Where do you deduct business vehicle expenses?

Keep track of your car expenses and how many miles you drive in total and for business, and when you file your taxes, you’ll enter the information on your Schedule C or Form 1040. Line 9 allows you to enter car and truck expenses, and section IV asks questions about your business and personal use of the vehicle.

What expenses can you deduct if you borrow a vehicle for your business?

Whether you borrow, lease, or own a vehicle that you use for business, you can deduct expenses related to maintenance, repair, gas, tires, registration, fees, toll road fees, and parking fees.

What is the current standard mileage deduction rate?

For 2025, the standard mileage rate for self-employed and business is 70 cents a mile.

Photo credit: iStock/PeopleImages

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOALR-Q325-082

If you’re a classic car enthusiast, you likely appreciate the design and historical significance of an antique set of wheels. They not only look cool, but they can be a collector’s item that conjures memories of another era.

Classic cars can also be expensive. And unlike buying a new car, they are potentially a good investment since they can actually appreciate in value. Learn more on financing classic cars, including how much classic cars cost, and what types of loans are available for classic cars.

What Is a Classic Car?

There’s more than one definition of a classic car. The Classic Car Club of America defines a full classic as “a ‘fine’ or ‘distinctive’ automobile and American or foreign built, produced only between 1915 and 1948.” ​​As far as definitions go, that one’s pretty narrow. Other definitions peg a classic car as any vehicle manufactured in 2000 or earlier, and they make distinctions between antique cars built in 1975 or earlier and vintage cars manufactured between 1919 and 1930.

Classic cars typically have been repaired and maintained in accordance with the manufacturer’s original design specifications and should not have been altered.

How Much Does a Classic Car Cost?

The price of a classic car will depend on the car’s make and model, what kind of condition it’s in, and how rare it is. Some might cost a few thousand dollars, especially if they aren’t in top condition, while particularly sought after and rare models can easily fetch millions of dollars.

It’s hard to say for sure which was the most expensive car ever sold, since transactions are often made privately. For example, an American businessman is thought to have bought a Ferrari 250 GTO for $50-plus million. Classic car auctions provide the best verifiable public record of classic car prices.

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How Can I Get a Classic Car Loan?

Most lenders don’t specialize in the collectors car market. For example, they may have little expertise in how to value a classic car. As a result, traditional forms of automobile financing may not apply to a classic vehicle. You may need to look into classic car loans, which are now offered by various specialty lenders. Research these lenders online, or ask other people in the collector car community if they financed their purchases and find out who they used.

Once you’ve identified a lender, you’ll need to go through their loan application process.

Classic Car Financing Credit Score

As with traditional auto loans, the loan amount and interest rate offered through a classic car loan will vary depending on your financial situation. Lenders will review your credit score to help them get an idea of your creditworthiness and how likely you are to pay back your loan on time.

The higher your score, the better the terms and interest rates you’ll likely be offered. If you have a low score, lenders will worry you are at greater risk of defaulting on your loan. To offset some of this risk, your lender will likely offer you a loan with a higher interest rate. Generally speaking, classic car financing with bad credit is a challenge.

Credit score requirements will vary by lender, but favorable classic car financing rates may require a credit score of 660 or higher.

Recommended: Guide to Car Depreciation

Classic Car Financing Rates and Terms

Though terms and interest rates on classic car loans will vary depending on your financial situation. Only people with the best credit scores will qualify for the lowest rates in financing a classic car.

It may be useful to compare classic car interest rates to the average interest rate for a used car, which was 11.87% in early 2025.

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Classic Car Financing Options and Alternatives

A classic car loan is not your only way to get yourself behind the wheel of a vintage automobile. Here’s a look at a few of your other options.

Paying Cash

Buying a classic car outright in cash is the cheapest way to own a classic car. Of course, that requires that you have the cash on hand and don’t need to dip into your emergency savings or retirement fund. Buying in cash means you’ll avoid fees and closing costs on a loan, and you won’t pay any interest, which could ultimately save you thousands of dollars.

Personal Loan

You may also be able to take out a personal loan for a classic car. When you take out a personal loan, you receive a lump sum from your lender anywhere from a few thousand dollars upwards of $100,000, which you’ll pay back in monthly installments with interest. Once you receive the loan, you can use the funds to purchase your classic car.

Loan amount, terms, and interest rates will again depend on your credit history and financial situation. Those with better credit scores will be offered the lowest interest rates. Carefully compare rates between classic car loans and personal loans.

Leasing a Classic Car

If you’re not ready to commit to purchasing a classic car, consider leasing one, whether with a short-term car lease or a long-term one. In return for some upfront costs and a series of monthly payments, leasing allows you to get behind the wheel of a classic car for a relatively short period of time.

You may be subject to mileage restrictions when you lease, as mileage is one of the factors that affects the value of the car. At the end of the lease period, you’ll return the car. And if you so choose, you can swap it out and give a different vehicle a try.

Refinance Your Classic Car

If at any point your classic car loan becomes unmanageable or you’re looking to save money, you may consider refinancing your car loan. When you refinance, you pay off your old loan with a new one, hopefully with better terms or a better interest rate.

When is the best time to refinance a car? You may consider refinancing when interest rates drop or when your financial situation improves. For example, if you’ve built your credit score, you may qualify for a new loan with a lower interest rate.

What are the benefits of an auto loan refinance? A lower interest rate can save you money over the life of the loan, while a longer term may lower your monthly payments. Because you’re paying interest for longer, however, a longer term may be more costly in the long run.

Beware that there are costs of refinancing an auto loan. Be sure you understand any extra upfront fees or closing costs that might reduce the amount you save by securing a lower interest rate.

Recommended: Questions to Ask When Refinancing

The Takeaway

Classic cars can be a joy to own, thanks to their time-honored design and collectibility. Classic car loans are one of the best ways to finance the purchase of a vintage automobile. However, you may also want to compare terms and interest rates to a personal loan to see if it is less expensive. Once you lock in a loan, you aren’t necessarily stuck with it forever. Down the road, you can look into refinancing to see if you could save money.

If you’re seeking auto loan refinancing, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your car in minutes.

FAQ

Is it smart to finance a classic car?

Financing a classic car might be an option if you don’t have the cash on hand to purchase it, or if that cash is better put to use in other ways. For example, if you are able to invest it at a higher rate of return than the interest rate on your loan, it may be smart to finance your vehicle. That said, be careful to only finance a classic car if you can truly afford to do so and can make monthly payments on time.

What are classic car financing terms?

They vary widely. A classic car loan is almost always different from a standard auto loan. With many of them, a sizable cash down payment will help you get favorable interest and terms.

What classic car financing options are there?

You can finance a classic car with a classic car loan, or you may want to consider a personal loan, which offers a borrower a lump sum of cash with no limitations on how that money is spent.

Photo credit: iStock/svetikd

SoFi's marketplace is owned and operated by SoFi Lending Corp.
Advertising Disclosures: The preliminary options presented on this site are from lenders and providers that pay SoFi compensation for marketing their products and services. This affects whether a product or service is presented on this site. SoFi does not include all products and services in the market. All rates, terms, and conditions vary by provider. See SoFi Lending Corp. licensing information below.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOALR-Q325-081