Tennessee Interest Rate Laws
Tennessee interest rate laws are stated in Tennessee Code, Title 47 (Commercial Instruments and Transactions), Chapter 14 (Interest Rates Generally), Part one (General Provisions).
Under Section 47-14-103, the state legal maximum interest rate is ten percent per annum. Under Section 47-14-121, interest rate on money judgment is ten percent per annum. If the judgment is based on a note or contract fixing another rate of interest, the interest will be same as agreed in the transaction.
Charging higher rate of interest than the permitted state legal maximum interest rate is usury. Section 47-14-112 considers usury a class A misdemeanor. Under Section 47-14-117, any contract charging usurious interest is not enforceable; in such contracts the lender can only recover the principal amount and the lawful interest. If it is found that the lender has taken usurious interest, charges or fees, the lender will have to reimburse twice the amount collected from the debtor plus attorney fees.
Installment loans under Section 45-2-1106, savings and loans under Section 45-3-705, single payment loans of $1000 or less under Section 47-14-104 are exempted from state prescribed interest rate.
Tenn. Code Ann. § 47-14-103 reads:
“47-14-103. Maximum effective rates generally.
Except as otherwise expressly provided by this chapter or by other statutes, the maximum effective rates of interest are as follows:
(1) For all transactions in which provisions of other statutes fix a maximum effective rate of interest for particular categories of creditors, lenders, or transactions, the rate so fixed;
(2) For all written contracts, including obligations issued by or on behalf of the state of Tennessee, any county, municipality, or district in the state, or any agency, authority, branch, bureau, commission, corporation, department, or instrumentality thereof, signed by the party to be charged, and not subject to subdivision (1), the applicable formula rate; and
(3) For all other transactions, ten percent (10%) per annum.”
Tenn. Code Ann. § 47-14-121 reads:
“47-14-121. Interest on judgments — Rate.
Interest on judgments, including decrees and municipal court judgments, shall be computed at the effective rate of ten percent (10%) per annum, except as may be otherwise provided or permitted by statute; provided, that where a judgment is based on a note, contract, or other writing fixing a rate of interest within the limits provided in § 47-14-103 for that particular category of transaction, the judgment shall bear interest at the rate so fixed.”
Tenn. Code Ann. § 47-14-117 reads in part:
“47-14-117. Usury or excessive charges — Contracts.
(a) Any contract which on its face requires the payment of usury or excess loan charges, commitment fees, or brokerage commissions shall not be enforceable; but the original lender or creditor may sue to recover the principal actually advanced, plus lawful interest, loan charges, commitment fees, and brokerage commissions.
(b) Where usury or excess loan charges, commitment fees or brokerage commissions do not appear on the face of the contract, but are proved, only the principal, plus lawful interest, loan charges, commitment fees, and brokerage commissions may be recovered.
(c) (1) Where, however, the court finds that the lender or creditor has been guilty of unconscionable conduct in a transaction by taking interest, loan charges, commitment fees, or brokerage commissions in excess of the limitations fixed by statute, that lender or creditor shall not be entitled to recover any interest, loan charges, commitment fees, or brokerage commissions with respect to that transaction, and shall be required to refund to the borrower or debtor any loan charges, commitment fees, or brokerage commissions, and twice the amount of any interest collected with respect to that transaction, and the borrower shall be entitled to recover reasonable attorneys’ fees from the lender.”
Tenn. Code Ann. § 47-14-104 reads in part:
“47-14-104. Single payment loans.
(a) Notwithstanding the provisions of this or other statutes, for all single payment loans for a term of one (1) year or less, in an original principal amount of one thousand dollars ($1,000) or less:
(1) The maximum effective rate of interest shall be that rate fixed, from time to time, as fair and reasonable, by rule adopted by the commissioner of financial institutions, but in no event to exceed ten percent (10%) per annum; and…”