Payday Loans in Tennessee: Subprime Report

Most people associate the state of Tennessee with its capital city, Nashville. Nashville is world renowned for its focus on, and production of, country music (along with other musical genres). But Tennessee offers so much more than just music. It’s here that you can visit the country’s most visited national park: the Great Smoky Mountains. And Tennessee is also known for its rich history and sumptuous BBQ.

Unfortunately, Tennessee is also home to a fair number of people who are struggling to make ends meet. The poverty rate in Tennessee during 2018 was 15%, placing the state within the top 15 highest poverty rates in the country. With its current (as of September 2019) unemployment rate of 3.4% and its median household income of $52,375 (which is nearly $10,000 less than the national average), there are many people living in this state who are having troubles with their finances.

When Tennessee residents need a “fast cash” solution, many may turn to predatory lending in the form of payday or title loans. Unfortunately, these supposedly “quick” solutions are far from a good option for consumers.

Predatory lending is, unfortunately, particularly alive and well in the state of Tennessee. According to a 2018 report by the non-profit Metro Ideas Project, Tennessee is home to the most predatory lenders in the entire U.S. As of the 2018 report, there were over 1,200 predatory lending locations across the state (with the greatest number of lenders in Shelby County, where Memphis is located). The highest concentration of predatory lenders was in Madison County, where the report found 29.53 locations per 100,000 people. The Pew Charitable Trusts found that about 6% of Tennessee residents borrowed a predatory loan in 2013.

Source: “Fighting Predatory Lending in Tennessee: A simple strategy for cities and counties.” Thongnopnua, J. (Metro Ideas Project). January, 2018.

Payday loans are short-term loans that come with triple-digit annual percentage rates (APR) and high fees. They are typically required to be paid back within just 2 to 4 weeks, making it difficult for borrowers to return the funds on time. As a result, many payday loan borrowers find themselves needing to take out additional loans just to pay back their original payday loan.

On average, 3,791 loans are taken out per Tennessee payday loan store per year, with a total volume of $1,124,696,366. Payday loan borrowers in Tennessee tend to be less educated, less likely to own their homes, more likely to be African-American, and more likely to earn below $40,000 per year. These individuals usually turn to payday loans to help them with ongoing, daily expenses during difficult times. In Tennessee, a payday loan of $100 given for a period of 2 weeks leads, on average, to an APR of 459%. According to a report by Tennessee Citizen Action, the average payday loan in Tennessee is $221, the average APR is 426%, and the typical borrower will hand over up to $490 in fees to borrow $300.

Another type of predatory loan to stay away from in Tennessee is called a title loan. Title loans require the borrower to provide their vehicle’s title to the lender. Lenders in Tennessee hold the title until the loan is paid in full. If a borrower is not able to pay back their loan on time (usually after about 4 weeks), they are at risk of having their vehicle taken away by the lender. If and when a vehicle is repossessed by the lender, Tennessee requires that the lender hold the vehicle for 20 days to give the borrower a chance to pay back the money owed. After 20 days, the lender has 60 days to sell or otherwise dispose of the vehicle.

As is the case with payday loans, title loans are often rolled over (or renewed) when borrowers are not able to pay back on time. In fact, in 2010, over 90% of title loans in Tennessee were renewed, and only 12% of loans taken out in 2010 were paid in full at the end of the year.

In 2013, total title loan volume in Tennessee reached $253,843,036, and Tennessee title loan fees totaled more than $226.6 million. With a total of 837 title lenders in the state, there are 5,809 people per lender and an average of 231 loans taken out per store.

It’s normal to hit a rough patch here and there, but it isn’t helpful to seek the quickest way to get cash. Be smart, do your research, and look for other alternatives to help with money troubles.

How to Report a Lender in Tennessee

If you’ve chosen to work with a payday or title lender, be sure to only go to a company 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.

If you believe your payday or title lender in Tennessee is violating the law (if 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:

• Register the complaint online
• Supply supporting documents
• Call 1-800-778-415 to receive a consumer complaint form
• Fax a completed consumer complaint form to (615) 253-7794
• Request a form via e-mail at tdfi.consumerresources@tn.gov
• Mail a completed consumer complaint form to TDFI (address below)

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.

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