Payday and Title Loans in

Tennessee

Payday Loans in Tennessee: Subprime Report

At a Glance
Tennessee, USA
  • Nickname: The Volunteer State
  • Population: 6,651,194
  • Capital: Nashville
  • Website: www.tn.gov
Download Fact Sheet

Tennessee is “The Volunteer State” because more than 30,000 residents responded to the call to arms from the federal government when 2,600 volunteers were needed to assist in the war in Mexico.1 This strong sense of patriotism sets Tennessee apart from the rest.1 But with a poverty rate of 13.7%2 and an unemployment rate of 5.3%3, struggling to make ends meet is not something Tennessee consumers signed up for.

When residents need a “fast cash” solution, many turn to payday and title loans in Tennessee. Unfortunately, these quick solutions are far from a good option for consumers. If Tennessee is known for their volunteer efforts, why hasn’t the government taken the consumer’s side in protection against the predatory ways of payday loans and title lenders?

An Analysis of Title Loans in Tennessee

Tennessee has 1,208 payday lenders, which is more than four times the number of McDonald’s restaurants in the state (285). That adds up to 23.62 payday stores per 100,000 residents, the 5th highest in the nation. Only New Mexico, South Dakota, Mississippi and Alabama have more payday loan stores per capita.5

On average, 3,791 loans are taken out per Tennessee payday loan store per year with a total volume of $1,124,696,366.6 With such high numbers, it’s no wonder why consumer advocate groups are calling for state legislature to tighten Tennessee payday loan regulations.

The History of Payday Loans in Tennessee

Tennessee-based Check Into Cash bills itself as the “father” of the payday industry. It claims that founder Allan Jones first developed the concept of payday loans in the early 1990s.6 The company now has more than 1,100 stores across the country, and even recently bought a UK-based payday operator.6

Quick Fact

On average, a loan of $100 given for a period of two weeks, can lead to an APR of 459%.7

Beginning in 2010, Tennessee Legislation worked to create stricter payday loan laws and regulations—and they succeeded. In fact, Tennessee is one of the 25 states to have passed serious legislation to regulate the functioning of payday loans.9

In 2014, Metro Council of Nashville passed a measure at the city level that prohibited payday lenders from being located within one-quarter of a mile from where another store already exists.8 This measure is an effort to help communities to avoid the mass pop-ups of payday lenders in Tennessee—which total more than the Starbucks, McDonalds and Burger Kings in the area.8 Payday lenders tend to open shop in low income neighborhoods regardless of whether another payday loan store already exists in that area. This new city-level measure helps to prevent that from occurring.8

Tennessee law requires that payday lenders provide borrowers with a cooling-off period—a mandatory period of time where a consumer cannot take out a new loan—so that a consumer has a break of at least one business day between paying off their second continuous payday loan and taking out another.10

Quick Fact

The average Tennessee borrower pays $490 in fees to borrow $300 for only five months.10

Tennessee law requires that payday lenders provide borrowers with a cooling-off period—a mandatory period of time where a consumer cannot take out a new loan—so that a consumer has a break of at least one business day between paying off their second continuous payday loan and taking out another.10

Tennessee Payday Loan Rules and Regulations
  • Maximum Loan Amount:$500
  • Maximum Length of Loan:31 days
  • Rollovers Permitted:None – cannot renew or otherwise consolidate
  • Fees and Finance Charges:15% of the face value of the check
  • Finance charge on a 14-Day $100 Loan:$17.65
  • APR on a 14-day $100 Loan:459%
  • Maximum Number of Outstanding Loans at a Time:None – a maximum of $500 per loan is allowed at one time.
  • Repayment Plan:Yes – Four equal monthly installments
  • Cooling-off Period:Next business day after two continuous loans repaid.11
Tennessee Payday Loans and Payday Lenders vs Alabama Payday Loans and Payday Lenders

Tennessee

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459% APR of Tennessee Payday Loan Stores6
1,208 Tennessee Payday Lenders6

Alabama

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456.25% APR of Alabama Payday Loan Stores6
1,177 Alabama Payday Lenders6

Final Notes on Payday Loans in Tennessee

Even though payday loans and other bad credit loans are regulated in Tennessee, they still offer a poor solution for “easy cash” for Tennessee consumers. With an average APR of 459% for a two-week loan, residents continue to struggle with paying back their payday loans in Tennessee.6

With below-average median household incomes and above average unemployment and poverty rates, Tennessee residents are having a hard time making ends meet. But the advertising of “easy money” and “no credit checks”, often entices residents in Tennessee to take out payday loans. Tennessee Legislation and advocacy groups continue to fight for stricter payday loan regulations, but it will take some time.

In 2013, total title loan volume in Tennessee reached $253,843,036.12 With a total of 837 title lenders in Tennessee, an average of 231 loans were taken out at each store.12 And worse, these loans are often renewed. In fact, in 2010 over 90% of title loans in Tennessee were renewed.12

Quick Fact

Tennessee title loan fees totaled $226.6 million while payday loan fees totaled $176 million.13

Title Loans in Tennessee

There are 837 title loan companies in Tennessee, which means there is 5,809 people per lender.12 And, what’s even worse is that the total loan volume for a single year was $253,843,036 with a total of 334,658 total loans taken out.12

Tennessee Title Loans vs Alabama Title Loans vs Georgia Title Loans

Tennessee

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837 Tennessee Title Loan Stores14
5,809 People per Tennessee Title Lender14

Alabama

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672 Alabama Title Loan Stores14
5,427 People per Alabama Title Lender14

Georgia

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375 Georgia Title Loan Stores14
19,190 People per Georgia Title Lender14

Tennessee Title Loan Restrictions

Under Tennessee law, a title lender cannot make a loan that exceeds $2,500 in principal.16 And while the initial term of a title loan in Tennessee is 30 days, Tennessee law allows a title lender to automatically renew a loan for additional 30-day periods once full payment has been made—essentially a rollover.

After the third “renewal”, the borrower must pay at least 5 percent of the original amount borrowed in addition to any interest and fees for continuing the loan renewal.16 If the borrower pays off the title loan in full before the date due, Tennessee law forbids the lender from charging any prepayment penalties or fees.16

Quick Fact

Only 12% of loans taken out in 2010 were paid in full at the end of the year.15

All title lenders in Tennessee must be licensed with the state. Each year, the state will review a lender’s records for compliance and requires licenses to be renewed annually. For every title loan made, the lender must keep an official record that lists:16

  • License tag number
  • VIN number
  • Make, model and year of the car

Unlike other states, lenders in Tennessee hold the title until the loan is paid in full.16 However, if the borrower fails to pay back the loan, the lender has the right to repossess the car.16 Once the car is repossessed, Tennessee requires the lender to hold the car for 20 days to give the borrower a chance to pay the money owed.16 After 20 days, the lender has 60 days to sell or otherwise dispose of the car.16

Quick Fact

Tennessee prohibits title loan companies from charging an effective interest rate greater than 2% per month. Lenders can charge additional fees for the loan to cover their own costs, but these fees cannot amount to more than 1/5 of the principal amount of the loan.16

Final Notes on Title Loans in Tennessee

While Tennessee attempts to take measures in protection of consumers, they’re still a long way away. Title loans in Tennessee have limitations and regulations, but consumers need to continue to take measures to protect themselves. Before jumping into a title loan in Tennessee, research your options and never put up with a threatening lender.

Regulating Payday and Title Lenders in Tennessee

It’s normal to hit a rough patch here and there, but it isn’t helpful to seek the easiest, quickest way to get cash. Be smart, do your research, and look for other alternatives for help with money trouble. However, if you do choose to go the payday loan or title loan route in Tennessee, only accept from a lender that acts in accordance with state laws—they’re there for a reason. Lenders must follow the payday and title loan laws of Tennessee, but if they don’t, make sure to file a complaint.

How to Report a Lender in Tennessee

If you believe your payday or title lender in Tennessee is violating the law (they’re misleading, harassing, or overcharging), you need to speak up. Filing a complaint might be just what others need to get help, too. Stand your ground and use the valuable resources available in Tennessee to find the help you need.

Contact the Tennessee Department of Financial Institutions to file a complaint. Once on their website, click on “How Do I?” and choose “File a Complaint”. Here are ways to file a complaint with the Tennessee Department of Financial Institutions:

Once your complaint has been completed and submitted to the department, it will be assigned to a Consumer Resources Specialist to review. If more information is needed, the assigned specialist will contact you for further information.

Tennessee Department of Financial Institutions Information

Outside Help for Payday and Title Loans in Tennessee

Aside from the Tennessee Department of Financial Institutions, you can reach out to Tennessee Citizen Action.  Working in the public interest as Tennessee’s premier consumer rights organization, Tennessee Citizen Action’s mission is to work to improve the overall health, well-being, and quality of life for all people who live and work in Tennessee. You can read about payday loans and title loans on Tennessee Citizen Action’s website to learn more.

Consumer Protection in Tennessee

Tennessee is taking the right steps in regulating title loans and payday loans. However, the state is still falling shy of full protection of its residents from the predatory nature of these loans.

To help Tennessee continue their battle against predatory lending and to better protect you against the vicious cycle of debt, reach out. By understanding warning signs, Tennessee laws, and where to report a lender or seek outside help against payday and title loans, you can help get the ball rolling for new regulations.

This page is available to help you find all the information you need about title loans and payday loans in Tennessee. Use it as much as you need to—it has all the information you need, and then some.

Guides to Payday and Title Loans in Tennessee Cities

You know payday and title loans in Tennessee are a problem. But what about at the city level?

Check out these payday and title loan guides for the following cities in Tennessee…

Chattanooga | Clarksville | Knoxville | Memphis | Murfreesboro | Nashville | Smyrna

Works Cited

  1. “Why Tennessee is Called the ‘Volunteer State'” Appalachian Magazine. Accessed March 29, 2017. http://appalachianmagazine.com/2016/05/24/why-tennessee-is-called-the-volunteer-state/
  2. “Tennessee’s poverty rate 12th highest in U.S.” Nashville Business Journal. Accessed March 28, 2017. http://www.bizjournals.com/nashville/blog/2012/11/tennessees-poverty-rate-12th-highest.html
  3. “Tennessee” Bureau of Labor Statistics. Accessed March 28, 2017. https://www.bls.gov/eag/eag.tn.htm
  4. “State Debt” Ballotpedia. Accessed February 13, 2017. https://ballotpedia.org/State_debt
  5. “McDonald’s vs. Payday Lenders” California State University Northridge. Accessed March 6, 2017. http://www.csun.edu/~sg4002/research/mcdonalds_by_state.htm
  6. “Payday Lending Abuses and Predatory Practices” The Center for Responsible Lending. Accessed March 28, 2017. http://www.responsiblelending.org/state-of-lending/reports/10-Payday-Loans.pdf
  7. “Tennessee State Information” Payday Loan Consumer Information. Accessed March 6, 2017. http://www.paydayloaninfo.org/state-information/50
  8. “Payday lending regulation garners support in Tennessee” The Tennessean. Accessed March 29, 2017. http://www.tennessean.com/story/money/2016/06/02/payday-lenders-under-attack-tennessee/85292526/
  9. “Tennessee Payday Loan Law and Legislation” UStatesLoans.org. Accessed March 29, 2017. http://www.ustatesloans.org/state-tn.html
  10. “Tennessee consumer advocates say proposed federal curbs on payday lenders a ‘good start’” Times Free Press. Accessed March 29, 2017. http://www.timesfreepress.com/news/politics/state/story/2016/jun/02/tennessee-consumer-advocates-say-proposed-federal-curbs-payday-lenders-good-start/369090/
  11. “Payday Loan Consumer Information” CFA. Accessed February 13, 2017. http://www.paydayloaninfo.org/state-information/50
  12. “Car-Title Lending” Center for Responsible Lending. Accessed February 13, 2017. https://www.tml.org/p/Center%20For%20Responsible%20Lending%20Car%20Title%20Loans%20Report.pdf
  13. “Payday and Car Title Lenders Drain $8 Billion in Fees Every Year” Center for Responsible Lending. Accessed February 15, 2017. http://responsiblelending.org/sites/default/files/nodes/files/research-publication/crl_statebystate_fee_drain_may2016_0.pdf
  14. “Driven to Disaster: Car-Title Lending and Its Impact on Consumers” CFA. Accessed February 15, 2017. http://www.responsiblelending.org/other-consumer-loans/car-title-loans/research-analysis/CRL-Car-Title-Report-FINAL.pdf
  15. “Car-Title Lending” Center for Responsible Lending. Accessed March 29, 2017. https://www.tml.org/p/Center%20For%20Responsible%20Lending%20Car%20Title%20Loans%20Report.pdf
  16. “Tennessee Law on Title Loans” Sapling. Accessed March 29, 2017. https://www.sapling.com/6866129/tennessee-law-title-loans