The law says that lenders cannot charge more than 16 percent interest rate on loans. Unfortunately, some lending companies owned by or affiliated with vehicle makers have devised schemes whereby you are charged interest at rates exceeding the maximum permitted by law.

What is a realistic interest rate on an automobile loan?

While interest rates do vary from lender to lender, the average car loan interest rate currently can be anywhere from as low as 0% to as high as 5%. Keep in mind that this is just an average range.

Is an auto loan a consumer loan?

A consumer loan is any loan or line of credit a consumer receives from a creditor. Common consumer loans are home mortgages, auto loans, credit cards, personal loans, student loans, home equity, and HELOC loans.

What is the legal interest rate in North Carolina?

North Carolina Interest Rate Laws Section 24-1 of Chapter 24 under General Statutes of North Carolina regulates the rate of interest in the state of North Carolina. The legal rate of interest in the state is eight percent (8%) per annum.

What are maximum interest rates allowed on auto loans?

Since most auto finance loan rates will be written into a contract, we’ve given you the written rate. 6 percent: Alabama, Maine, Maryland, Massachusetts, Minnesota, North Dakota, Oklahoma, Pennsylvania, Texas 10 percent: Arizona, Hawaii, Kansas (Kansas can rise to 15 percent by mutual agreement), New Hampshire, Tennessee, Utah

When do you get a lower interest rate on a car loan?

Loans under 60 months have lower interest rates. Loan terms can have some effect on your interest rate. In general, the longer you pay, the higher your interest rate is. After 60 months, your loan …

How does interest work on an auto loan?

When you take out an auto loan, the lender buys the car for you and you pay the money back in installments over a set number of years. Essentially, the lender is giving you the right to use its money. In return, you agree to pay the lender a predetermined rate of interest. This is how the lender earns a profit on the loan.