Posted on January 21, 2019 in Banking Law
Traditionally, both individuals and businesses would go to their local bank or savings institution for a loan or line of credit. Now, there are thousands of online banks and lenders as well as a number of physical banks and lenders. If you enter into a contract with one of these entities, you need to be aware of their interest rates and what is legal in the State of Tennessee. Contracts which, on their face, require the payment of usury or excess loan charges, commitment fees or brokerage commissions are not enforceable. T.C.A. Section 47-14-117. Under the same statute, if a court finds that a 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 may 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. On September 11, 2018, the Tennessee Department of Financial Institutions Commissioner Greg Gonzales announced that the maximum effective formula rate of interest in Tennessee was 9.0 percent per annum. The rate is based on a ceiling of 4.0 percent over the weekly average prime loan rate of 5.0 percent as published by the Federal Reserve on September 10, 2018. As of January 17, 2019, the average prime loan rate is 5.50 percent, so you are now looking at 9.5 percent per annum. Pursuant to T.C.A. Section 47-14-118, there is a three (3) year statute of limitations for bringing a claim for usury. Savings and Loan institutions have higher interest rates which can range from 18% to 24% to 30%, depending on the circumstances. See generally T.C.A. Sections 45-5-401 and 45-5-301. Payday loans are limited to $500, and the limit you can take is $425. Every payday loan has an annual percentage rate of 459%. Payday loans are not rolled over in the state and lenders are prohibited to take any criminal actions against borrowers. Should you have questions or need to consult with an attorney about health insurance claims, send your email address and question confidentially to Joneslaw08@gmail.com. Web: http://www.jonesandassociateslawfirm.com. Phone: (423) 424-6208.