Minnesota Car Loan Laws

Minnesota sets dealer financing ceilings by the age of the car, caps the doc fee at $350, and protects small loans from deficiency claims.

Updated Oct 26, 2026 By Lenditia Editorial Team 6-minute read No right to cure

In short

A Minnesota dealer contract can carry up to 18% a year on a current or last-year model, 19.75% on a car two or three model years old and 23.25% on anything older. Since July 1, 2025, the documentary fee is capped at $350 or 10% of the sale, whichever is less. You pay 6.875% motor vehicle sales tax on the price minus your trade-in. Minnesota gives no right to cure before repossession, but when the credit was $8,100 or less, the lender cannot collect a deficiency after taking the car. The Department of Commerce licenses sales finance companies.

Right to cure: None in state law
Rate ceiling: 18% to 23.25% by age
Doc fee limit: $350 or 10% of price
Vehicle sales tax: 6.875%

Map of the United States with Minnesota highlighted

Minnesota car-finance rules at a glance

Minnesota No right to cure No general right to cure in state law Checked Oct 26, 2026

Right to cure: None in state law; the contract defines default
Rate ceiling: 18% (0–1 model years old), 19.75% (2–3 years), 23.25% (older); Minn. Stat. 53C.09 for dealer contracts; banks and credit unions lending directly follow their own rules.
Doc fee limit: Lesser of $350 or 10% of the sale, since July 1, 2025; Fixed in Minn. Stat. 168.27, subd. 31 (2023 law); not indexed; must be listed separately on the sales agreement.
After repossession: Notice before sale; redemption; no deficiency if credit was $8,100 or less; Minn. Stat. 325G.22 covers consumer purchase-money credit; above the threshold the UCC deficiency rules apply.
Vehicle sales tax: 6.875% of the price minus trade-in; $20 local excise in some areas
Regulator: Minnesota Department of Commerce

How much interest a Minnesota car contract can carry

The Motor Vehicle Retail Installment Sales Act, now chapter 53C of Minnesota Statutes, governs the retail installment contract you sign when a dealer arranges your financing. Section 53C.09 sorts cars into three classes by model year, counted from the year of the sale, and sets a simple annual rate for each.

Minnesota maximum finance charge on motor vehicle installment contracts (Minn. Stat. 53C.09)
Class	Model year compared with the year of sale	Ceiling
Class 1	Same year or one year older	18% a year
Class 2	Two or three years older	19.75% a year
Class 3	Any other vehicle	23.25% a year

For a sale in 2026, a 2025 model is Class 1 and a 2023 model is Class 2. A dealer may use the general credit statute, section 47.59, instead, but its motor vehicle rules list the same three ceilings. Banks and credit unions that lend to you directly follow their own rules. Check what any rate costs with the car payment calculator.

Fees and taxes on a Minnesota car purchase

Documentary fee. For sales and leases from July 1, 2025, the dealer may charge no more than $350 or 10% of the sale, whichever is less. The fee must appear as its own line on the sales agreement (Minn. Stat. 168.27, subd. 31).
Motor vehicle sales tax. The state rate is 6.875% of the purchase price. When you trade a car to a licensed dealer, its value comes off the price before the tax is figured.
Local tax. City and county sales taxes do not apply to vehicles. Some cities and counties charge a $20 local vehicle excise tax instead, collected by the dealer.
Older, low-value cars. A passenger car at least 10 model years old that sells for under $3,000, and whose average value is also under $3,000, is taxed a flat $10.
Late charges. If the contract allows it, an installment paid 10 or more days late can draw a charge of 5% of the payment or $5, whichever is greater.

Falling behind on a car loan in Minnesota

Chapter 53C does not give you a notice of default or a set period to catch up before the lender acts, and Minnesota has no general right-to-cure statute for car loans of the kind some states have. Your contract defines default, and Article 9 of the Uniform Commercial Code, codified in chapter 336, sets most of the repossession rules.

Taking the car. After default the lender may repossess without going to court, as long as it does not breach the peace (Minn. Stat. 336.9-609).
Notice before the sale. The lender must send you notice before it sells the car (Minn. Stat. 336.9-611).
Redemption. Until the car is sold or the lender contracts to sell it, you can get it back by paying everything secured by the car plus reasonable expenses (Minn. Stat. 336.9-623).
Deficiency limit. If the credit extended was $8,100 or less, you owe nothing more once the car is repossessed or surrendered, and the lender need not resell it (Minn. Stat. 325G.22).

On a larger loan the lender can still sue for the balance left after the sale. Our guides to repossession and voluntary surrender explain your options at each step.

Where to check a lender and complain

No one may run a sales finance company in Minnesota without a license from the commissioner of commerce. Banks and credit unions are exempt from that license and answer to their own regulators. Section 53C.04 lets a buyer bring a complaint about a contract to the commissioner.

Minnesota Department of Commerce

Licenses sales finance companies, examines them and takes buyer complaints under chapter 53C.

Minnesota Attorney General

Takes consumer complaints about dealer sales practices and advertising.

Consumer Financial Protection Bureau

Handles complaints about any auto lender or servicer, including banks and finance companies.

Questions people ask

What is the maximum car loan interest rate in Minnesota?

For dealer-arranged contracts, 18% a year on a current or last-year model, 19.75% on a car two or three model years old and 23.25% on older vehicles.

How much can a Minnesota dealer charge for a doc fee?

Since July 1, 2025, no more than $350 or 10% of the sale price, whichever is less.

Do I pay sales tax on my trade-in value in Minnesota?

No. When you trade a car to a licensed dealer, its value is subtracted before the 6.875% motor vehicle sales tax is applied.

Can a lender sue me after repossession in Minnesota?

Only if the credit extended was more than $8,100. At or below that amount, the repossession ends what you owe. See deficiency balances.

Sources

Facts on this page were checked against these sources on October 26, 2026. The $8,100 deficiency threshold is the figure printed in the current statute.