Key takeaway: Lenders may need to review potentially in-scope auto loans incurred after December 31, 2024. This may include loans already on their books. Batch VIN decoding can help screen an entire portfolio for vehicle-level criteria used in specified passenger vehicle loan (SPVL) classification, without checking each VIN individually.
This article is for informational purposes only and is not tax or legal advice. Review current IRS guidance and consult qualified counsel before making reporting decisions.
Why Lenders May Need to Review Existing Auto Loans
OBBBA was enacted July 4, 2025, but the relevant rules apply to indebtedness incurred after December 31, 2024. Therefore, a portfolio review may include loans originated before OBBBA was enacted. At that time, some lenders may not have collected every vehicle-level data point now needed for SPVL identification.
Regulatory status: IRS Notice 2025-57 provided transition relief for interest received in calendar year 2025. For 2026 and later, the IRS has published draft Form 1098-VLI instructions, which remain subject to change. Draft forms should not be used for filing.
See ESP’s OBBBA reporting workflow for auto lenders for the origination-to-reporting process.
What Is a Specified Passenger Vehicle Loan?
At a high level, an SPVL is debt incurred after 2024 to purchase an applicable passenger vehicle for personal use. In addition, the debt must be secured by a first lien on that vehicle. Key vehicle-level criteria include:
- Original use begins with the borrower. Under proposed IRS regulations, the loan documentation generally must treat the vehicle as new.
- The vehicle is an eligible type: car, SUV, pickup truck, van, minivan, or motorcycle.
- Its gross vehicle weight rating is under 14,000 pounds.
- Final assembly occurred in the United States.
The IRS proposed regulations explain that VIN plant information may help establish whether final assembly occurred in the United States. However, loan records must establish the remaining loan- and borrower-level facts.
Under the current draft instructions, reporting generally applies when an interest recipient receives at least $600 on an individual SPVL. This interest must be received during the calendar year in the course of a trade or business. The threshold applies separately to each SPVL. Classifying a loan as a likely SPVL does not by itself establish a filing requirement.
A Five-Step Batch VIN Decoding Workflow
- First, export loans identified as incurred after December 31, 2024, based on the lender’s approved compliance methodology.
- Next, include each VIN, origination date, account identifier, and reconciliation fields.
- Then, submit the VIN table for batch processing.
- After processing, match returned vehicle attributes to loan records and flag potential SPVLs.
- Finally, route invalid, incomplete, or ambiguous VIN results for documented review.
Illustrative example: In a portfolio of 25,000 potentially in-scope VINs, records matching the relevant criteria remain candidates for loan-level review. Missing or conflicting results receive an exception status. For each exception, retain the submitted VIN, returned fields, data version, and processing date. Also record the reason and final resolution. As a result, the lender has a reproducible record for audit support and future reprocessing.
What VIN Data Can and Cannot Establish
Depending on the vehicle and available source data, batch VIN decoding can return vehicle type, model attributes, GVWR, and plant information. However, missing or conflicting results should be routed for review. VIN decoding does not establish when the debt was incurred, first-lien status, personal use, original use, or interest received. It also cannot determine whether the borrower can claim a deduction. Instead, lenders must verify those facts through loan, title, and servicing records.
Loan, lien, use, interest, and borrower-level requirements must be verified separately; vehicle data alone does not establish reporting or deduction eligibility.
Use VinPOWER™ for Portfolio-Scale VIN Review
VinPOWER™ from ESP Data Solutions supports VIN validation and decoding, with vehicle data coverage from 1981 to present. ESP’s VIN batch decoding service processes a table of VINs and returns a structured response file, helping lenders enrich and reconcile large portfolio datasets.
Plan your portfolio review. Contact ESP Data Solutions to discuss your VIN volume, required vehicle fields, output format, and exception-handling needs, or email sales@espdata.com.
Frequently Asked Questions
What information should lenders include in a batch VIN file?
At minimum, include the full VIN and a unique account identifier. Origination date and other reconciliation fields help connect decoded vehicle data to the correct loan record.
Can batch VIN decoding determine full SPVL eligibility?
No. It supplies vehicle attributes used in the review. Loan timing, lien status, personal use, original use, and interest received must be verified separately.
How did lenders satisfy the 2025 reporting requirement?
IRS Notice 2025-57 allowed eligible interest recipients to satisfy their 2025 obligations by making total interest received available to the borrower by January 31, 2026, rather than using the standard Form 1098-VLI process.