Compliance
Reporting Car Loan Interest Under OBBB: What Lenders and Businesses Need to Know in 2025
New reporting requirements for car loan interest under section 6050AA take effect in 2025—here’s practical guidance for lenders and businesses on compliance steps and transitional relief.
By NomadicTax Research Team • 5-8 min read • November 14, 2025
## What’s New: Section 6050AA and Car Loan Interest Reporting
The One, Big, Beautiful Bill introduced section 6050AA to the Internal Revenue Code. Under it, businesses and lenders receiving $600 or more in **interest from individuals** on specified passenger vehicle loans must now report this interest and provide statements to borrowers. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
### Key Definitions
- **Qualified Passenger Vehicle Loan Interest (QPVLI)**: Interest paid on loans incurred after December 31, 2024, to purchase an applicable passenger vehicle (cars, SUVs, etc.), secured by a first lien and for personal use. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- **Specified Passenger Vehicle Loan**: Defined similarly—it’s the debt incurred as part of the purchase, secured, and for personal use. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
## Transitional Relief for 2025
To help entities adjust systems and processes:
- **Statement option**: Instead of filing the information return, lenders for interest in calendar year 2025 may satisfy reporting by **providing a statement to individuals** listing total interest received. Statement delivered by online portal, monthly/annual statement, or similar means. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- **Penalty relief**: For 2025, penalties under sections 6721 and 6722 will **not** be imposed if the statement method is used. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- **Deadline for statements**: Must be made available by **January 31, 2026**. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
## Practical Steps for Businesses & Lenders
Here’s how to get ready:
- **Audit your systems**: Ensure your ERP or billing software can track interest from applicable loans, vehicle details, VINs, etc. These are required under section 6050AA. ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- **Create statement templates**: Statements must include interest amounts, vehicle details, loan origination date, outstanding principal at start of year. Decide on delivery method (portal, statements, etc.). ([irs.gov](https://www.irs.gov/irb/2025-45_IRB?utm_source=openai))
- **Review contracts**: Is your interest amount over $600 per borrower in 2025? If yes, you must comment these new reporting obligations in your borrower notice.
## Example
Suppose a car dealership financed a vehicle in January 2025 to an individual. Over the year, the interest they received from that borrower totals **$750**. Since it's over $600, for that 2025 calendar year, the dealership will make available a **statement** with the required information by January 31, 2026, but won’t be penalized if using this transitional method.
However, for 2026 onwards, **full information returns and payee statements** will be required. No shortcuts.
## Implications & Pitfalls to Avoid
- Waiting too long: System updates often take months—begin tracking and compiling data now.
- Missing details: Omitting VIN, loan dates, or vehicle make/model may lead to incorrect statements and future penalties.
- Confusion with personal vs. business use: Only **personal use** vehicles qualify; business-usage vehicles may be excluded.
## Bottom Line
This section of OBBB offers relief but comes with strong compliance requirements. Businesses and lenders should treat 2025 as a transition period—implement accurate tracking and statement preparation before full reporting starts in 2026.