A Rolls-Royce Spectre all electric luxury coupe is displayed at Rolls-Royce Motor Cars dealership showroom in London.John Keeble | Getty Images News | Getty ImagesRepublicans are trying to make good on President Donald Trump’s campaign promise to give Americans a tax break on their car loan interest. However, as structured, most households wouldn’t get a substantial financial benefit, economists said.House and Senate Republicans proposed giving drivers a tax deduction of up to $10,000 on annual interest for new auto loans in their so-called “One Big Beautiful Bill Act.” The tax break would be temporary, ending after 2028.But few drivers pay that much annual interest, said Jonathan Smoke, chief economist at Cox Automotive, an auto market research firm.It’s “pretty rare,” he said.Auto loans don’t have annual interest charges of $10,000 or more outside of large loans on “exotic” vehicles, Smoke said.A ‘laundry list of exotic names’How large would the loan have to be?It would take a loan of roughly $112,000 to use up the full $10,000 deduction in the first year of car ownership, Smoke said.Only about 1% of new auto loans are this big, according to Cox Automotive data.Cars most likely to see loans of that magnitude include a “laundry list of exotic names” like Rolls-Royce, Ferrari, Bentley, Aston Martin, Lamborghini, McLaren, Porsche, Land Rover, Cadillac, Maserati, Lotus and Mercedes-Benz, Smoke said.Smoke’s analysis assumes drivers use the most popular loan length, 72 months at the current new loan average of around 9.5%. It includes a 10% down payment and various fees like taxes and registration.The example implies a vehicle purchase price of about $130,000, he said.Vehicles with an average purchase price near this level include a Porsche Panamera or Cadillac Escalade, he said. Monthly car payments under those loan terms would likely be more than $2,000, Smoke said.More from Personal Finance:The salary Americans say they need to live comfortablyWhy electricity prices are surging for U.S. householdsHouse, Senate tax bills both end many clean energy creditsHouse Republicans included the tax break on auto loan interest in a m …
