All states in this country have laws against excessive interest rates charged for loans called "usury laws." The laws on this subject are typically set forth in a state's Constitution Code. Typical allowable interest rates in a transaction not invovling real estate is prime rate (tied to certain major indexes) plus 5%.The 20% interest rate charged by your friend for a $2,000 almost four (4) years ago for a car loan seems too high for accepted loans in 2007. If the 20% interest rate exceeds your state's usury laws, the typical result is that the loan ends up having no accrued interest upon it as a penalty and any interest paid on the loan is applied to principle owed.You did not break the agreement by selling the car since you had title unless the agreement called for payment of the loan in full if the car was sold.