Maximum Car Loan Interest Rate in Texas (2026)

The short answer

Yes. Texas caps the finance charge on a motor vehicle retail installment contract, which is the kind of financing you sign at a dealership. The cap depends on the vehicle's age. For 2026 sales, the Office of Consumer Credit Commissioner (OCCC) says newer vehicles (2024 models or newer) top out at the 18% alternate rate. A 2022 or 2023 model can go up to about 21%–22.5% APR, and a 2021 or older vehicle up to about 24.7%–26.8% APR, depending on the loan term (OCCC 2026 rate chart). Those are legal ceilings, not typical rates. Your actual rate depends on your credit, the lender, and the deal, so get pre-approved and compare before you sign.

Where the cap comes from

Texas Finance Code §348.104 sets maximum add-on charges per $100 per year for contracts paid in substantially equal monthly installments:

• $7.50 per $100: a new vehicle whose model year isn't earlier than the year of sale
• $10 per $100: other new vehicles, or used vehicles no more than two model years old
• $12.50 per $100: used vehicles no more than four model years old
• $15 per $100: older used vehicles (or $18 if the principal balance is $300 or less)

Under §348.105, a contract can instead use the optional ceiling in Finance Code Chapter 303. The OCCC describes that as an alternate rate of 18%.

What the 2026 caps look like as APRs

Add-on rates aren't APRs, and the OCCC warns lenders not to quote add-on rates to consumers. Its 2026 chart (effective Jan. 1 to Dec. 31, 2026) converts them:

Classes 1 and 2 (2024 or newer models in 2026): the OCCC leaves these conversions off the chart because they come out below the 18% alternate rate.

Class 3 (2022 or 2023 models), $12.50 add-on:

• 36 months: 22.01%
• 48 months: 21.53%
• 60 months: 21.05%

Class 4 (2021 or older), $15 add-on:

• 36 months: 25.98%
• 48 months: 25.32%
• 60 months: 24.68%

The OCCC also publishes month-by-month conversions for terms from 1 to 84 months.

How to use this before you're approved

1. Know your vehicle's class. A 2021 model bought in 2026 falls in Class 4, with the highest ceiling. Older, cheaper cars can legally carry much higher rates, so compare the total cost, not just the payment. See total cost, not monthly payment.
2. Read the APR, not the add-on. Your contract's TILA box shows the APR. Our APR vs. interest rate guide explains the difference.
3. A rate under the cap isn't automatically a good rate. It just means the rate is legal. Get a pre-approval and compare it with any dealer-arranged offer. Dealer markups are covered in negotiating the dealer APR.
4. Check terms against the chart. On a 2021 or older vehicle, an APR above the Class 4 figure for your term is a red flag. Ask questions, and if it doesn't add up, contact the OCCC at 512-936-7600.

What this chart doesn't cover

The chart applies to Texas motor vehicle retail installment contracts. Loans you get directly from a bank, credit union, or other lender may fall under different rules. Add-on products like service contracts or GAP are priced separately from the finance charge, so a capped rate doesn't mean a capped total. See optional GAP and add-ons. This article is general information, not legal advice.

Bottom line

Texas law caps dealer-arranged auto financing by vehicle age. In 2026, that's 18% for 2024-and-newer models and roughly 21%–26.8% APR for older used vehicles, depending on age and term. Use the cap as an upper limit, not a target, and shop your rate before you shop the car.

Check your pre-approval: Start the form.