If your credit isn't stellar, you might end up paying a higher interest rate on an auto loan. The maximum interest rate a lender can charge depends on state law. That's why you might know someone with a similar credit history living in a different state who pays less -- or more -- in interest. However, if your lender is based out of state, that's another matter.

State Usury Laws

While each state has a limit on how much a lender is permitted to charge in interest, if your lender is based in another state, it can charge maximum rates based on the home state's limits. If you have questions concerning your state's usury law, contact your state's treasury department. If your credit history doesn't qualify you for a good loan rate, try saving up for a larger down payment. If you can manage between 20 and 25 percent of the car's value, it's likely the lender will give you a better rate because you have more equity in the vehicle.