If you use your vehicle in business, you can deduct your vehicle expenses as business expenses. That can include interest on a loan used to buy a vehicle used in business.
However, you can use either the standard mileage rate method, or the actual expense method, but not both. If you use the actual expense method in the first year you use the vehicle in business, you must continue to use the exact method every year after that.
The point is that the standard mileage method is easier, requires less proof, and usually returns a larger deduction. With a large interest expense this year, the actual expense method might return a larger deduction this year, but then you must use the actual expense method every year after, even if it is not more favorable in the future.
Using the standard mileage method, you must keep track of business miles using an app, diary or logbook that includes the date, miles driven, and business purpose. The deduction is about 58 cents per mile (it changes every year, turbotax will have the right figure) and includes all car expenses -- fuel, maintenance, repairs, insurance, and wear and tear.
Using the actual expense method, you must track all your miles driven for work, as well as your personal miles, and you must track all your vehicle expenses, including fuel, repairs, maintenance, insurance, and interest on your loan. Then, you deduct the percentage of expenses equal to the percentage of your work miles. (If you drove 10,000 personal miles and 15,000 work miles, for example, then since 60% of your total miles were for work, you deduct 60% of your total expense as a business expense.)
You can only list the interest as a specific expense if you use the actual expense method, and if you use the actual expense method in the first year you use the car for business, then you must use the actual expense method every year after that as well. And while the actual expense method might get you a larger deduction this year, it will probably give you a smaller deduction over time.
This is a business expense on schedule C that you deduct against your business income in order to determine your net profit or taxable income.
