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State rules

Michigan auto loan rules

Michigan has 533 Census places covered on AutoLoanable, with a combined estimated population of 5,043,882. Vehicle financing in Michigan is governed by state law — the interest-rate caps, title-lending rules, sales-finance licensing and the regulator that oversees them. The sourced figures below apply to every car loan made to a borrower in the state.

By the AutoLoanable Editorial Team · Last updated 2026-09-17

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7% cap state usury cap
6% statewide state vehicle sales tax
No statute vehicle title loans
DIFS state regulator

Key rules for car buyers in Michigan

RuleDetailSource
Maximum legal interest rate (usury cap) 7% per annum maximum by written agreement; 5% legal rate (MCL 438.31)
Source says: "it shall be lawful for the parties to stipulate in writing for the payment of any rate of interest, not exceeding 7% per annum"		 Michigan Legislature
as of 2026-09-17
Vehicle title loan status No title-loan-specific license; a vehicle-title-secured loan made by a licensed regulated lender is capped at 25% per annum under the Credit Reform Act, effectively excluding the product.
Source says: "a regulated lender may charge, collect, and receive any rate of interest or finance charge for an extension of credit not to exceed 25% per annum" License category: Regulatory loan license (regulated lender) — no title-loan license category.		 Michigan Legislature — MCL 445.1854 (Credit Reform Act)
as of 2026-09-17
Sales finance / installment lender licensing License required from the commissioner to make regulated loans (Regulatory Loan Act, MCL 493.1 et seq.)
Source says: "a person shall not engage in the business of making loans of money ... without first obtaining a license from the commissioner" Motor-vehicle retail installment sales are separately governed by the Motor Vehicle Sales Finance Act (1950 (Ex. Sess.) PA 27, MCL 492.101-492.141).		 Michigan Legislature
as of 2026-09-17
State lending regulator Michigan Department of Insurance and Financial Services (DIFS)
Source says: ""Department" means the department of insurance and financial services"		 Michigan Legislature
as of 2026-09-17
Sales tax on vehicle purchases 6% state rate; no local sales tax
Source says: "Individuals or businesses that sell tangible personal property to the final consumer are required to remit a 6% sales tax on the total price of their taxable retail sales to the State of Michigan."		 Michigan Department of Treasury
as of 2026-09-17

How to use these rules

  1. Check the ceiling before you compare offers

    If a quoted APR looks extreme, compare it against the Michigan cap above — and note that a specific statutory exemption can apply to a particular product.

  2. Verify the lender is licensed

    Use the regulator named in the table to confirm the lender or sales-finance company may legally serve borrowers in the state.

  3. Know what is secured against your car

    A vehicle title loan is secured by the car itself. If the state permits it, understand the repossession terms before you sign anything.

  4. Budget for tax and fees separately

    Sales tax and title fees are financed along with the car, so they raise the amount you borrow — and therefore the interest you pay on them.

Cities in Michigan

We cover 533 Census places in Michigan.

Frequently asked questions

What interest rate can a lender charge on a car loan in Michigan?
It depends on the product and the statute that governs it. The sourced table on this page lists Michigan's usury cap, its motor-vehicle sales-finance rules and the licensing requirements, each with its publisher and a link to the primary source.
Are title loans legal in Michigan?
Vehicle title lending is regulated state by state; some states permit it under a licensed lender, some cap it, and some prohibit it outright. See the sourced figure on this page for the current position, and confirm it with the state regulator before you sign anything.
Do I need a license to finance a car in Michigan?
Most consumer lenders and motor-vehicle sales-finance companies must be licensed by the state regulator named on this page. You can verify a lender's licence with that regulator before you sign anything.

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