A Close Look at Payday Loan Rules in Tennessee

Payday loans are offered to individuals that are facing a small shortfall in the cash amount during the end of the month. The loan amount that ranges from $500 to $1000 is enough to allow a person to keep going between paychecks. Whether the cash shortfall is caused due to repayment of another debt, an emergency car repair, or a breakdown of the house HVAC unit, a payday loan can allow you to meet the expenses easily.


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The best thing about payday loans is that the application process is fast as compared to obtaining a traditional loan. There is no lengthy application to fill or wait a long time for the response. Individuals can obtain the loan in as little as 48 hours.

Legal requirements regarding payday loans differ in the states. Here we will analyze payday loan that relates to the state of Tennessee.

Tennessee Payday Loan Laws

Payday loan in the state of Tennessee is legal. Rules regarding the loans are given in Tenn. Code Ann. 45-17-101 et seq. The state law prohibits lenders from issuing more than $425 (or a $500 check). Moreover, the maximum loan term allowed in the state for a payday loan is 31 days.

The state laws also impose limits on the finance charges, which is 15 percent of the face value of the loan. Loan charge limit on the fourteen days $100 loan is $17.65 while the annual percentage rate (APR) allowed for the same loan is 459 percent.

According to the Tennessee Code 45-17-101, lenders are allowed to offer 3 loans at a time. Two are allotted per licensee.

However, no rollover is permitted that means an individual cannot consolidate or renew the loan.

Additional Fees and Charges

The lender is not allowed to raise the rates in case the borrower is unable to make the payment on time. In addition, the lenders are not required to charge additional fees for the nonpayment of the loan amount. They must work with the borrower to ensure that the loan is repaid without causing undue hardship to the borrower.

Criminal Action

The lenders are not allowed to carry on criminal action against the borrower. However, they are allowed to charge court costs involved in taking legal actions to collect the loan payment. Also, a borrower can be prosecuted in the court if he or she purposefully gives a check that won’t go through.

Any individual who believes that the payday loan lender is not acting according to the legal provisions that are applicable in the state, can make a complaint to the Tennessee Department of Financial Institutions. The state regulator can answer questions regarding statutory requirements regarding the payday loans applicable in the state.

Final Note

A payday loan can help meet important financial expenses. That being said, you must remember that a payday loan is a big responsibility. Before applying for the loan, you should make sure that you would be able to repay the loans within the specified time. Otherwise, you could end up doubling your financial troubles instead of solving them.