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State rules

Texas auto loan rules

Texas has 1,224 Census places covered on AutoLoanable, with a combined estimated population of 22,006,049. Vehicle financing in Texas 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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10% cap state usury cap
6.25% statewide state vehicle sales tax
Permitted vehicle title loans
OCCC state regulator

Key rules for car buyers in Texas

RuleDetailSource
Maximum legal interest rate (usury cap) 10% per year maximum; a greater rate is usurious unless otherwise provided by law (Tex. Fin. Code § 302.001)
Source says: The maximum rate or amount of interest is 10 percent a year except as otherwise provided by law.		 Texas Legislature (Texas Constitution and Statutes)
as of 2026-09-17
Vehicle title loan status Motor vehicle title loans are permitted; they are obtained through licensed credit access businesses under Texas Finance Code ch. 393, subch. G (the third-party lender is not licensed; the credit access business charges a fee).
Source says: "Credit access businesses obtain credit for a consumer from an independent third-party lender in the form of a deferred presentment transaction or a motor vehicle title loan, more commonly referred to as "payday loans" or "title loans."" License category: Credit access business license (OCCC).		 Texas Office of Consumer Credit Commissioner (OCCC)
as of 2026-09-17
Sales finance / installment lender licensing License required for non-depository lenders charging more than 10% interest; Chapter 342 governs consumer loans (Tex. Fin. Code § 342.051)
Source says: Non-depository lenders who engage in making, transacting, or collecting loans with a rate of interest greater than 10% must be licensed by the OCCC. Motor-vehicle retail installment sales are separately governed by the Texas Retail Installment Sales Act (Texas Finance Code ch. 345) (Tex. Fin. Code ch. 345).		 Texas Office of Consumer Credit Commissioner (OCCC)
as of 2026-09-17
State lending regulator Texas Office of Consumer Credit Commissioner (OCCC)
Source says: The OCCC licenses and regulates non-depository lenders in the state of Texas.		 Texas Office of Consumer Credit Commissioner (OCCC)
as of 2026-09-17
Sales tax on vehicle purchases 6.25% state rate; local rates additional
Source says: "6.25 percent of sales price, minus any trade-in allowance."		 Texas Comptroller of Public Accounts — Motor Vehicle Sales and Use Tax
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 Texas 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 Texas

We cover 1,224 Census places in Texas.

Frequently asked questions

What interest rate can a lender charge on a car loan in Texas?
It depends on the product and the statute that governs it. The sourced table on this page lists Texas'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 Texas?
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 Texas?
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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