Payday Loan Consolidation in Tennessee

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A Complete Guide to Payday Loan Consolidation in Tennessee

Tennessee is said to be where payday loans originated. Referred to as “deferred presentment services loans,” Allan Jones opened the first Check Into Cash store in the 1990s, and thus, the payday loan industry was born. Tennessee has clamped down on payday lending since that time, however, high-cost loans are still a problem for many living in the state. Fortunately, there’s a solution for those suffering from a mountain of unsecured debt: payday loan consolidation. 

Payday loan laws in Tennessee

In the state of Tennessee payday lending is considered legal. The state has a $500 loan limit, with a maximum term lasting 31 days. APR is not capped in Tennessee and averages almost 500% for payday loans. 

Additional fees include $17.65 for every $100 borrowed plus a max 15% charge of the principal amount. Rollovers are prohibited and while you can have two loans at a time, together they cannot total more than $500. There is also a 24-hour cool-off period after a loan has been completely paid off before you can take out another. 

Lenders must obtain a license from the Tennessee Department of Financial Institutions in order to legally operate in the state. Lenders who violate Tennessee laws are subject to prosecution and having their license revoked. 

Read more about payday loan laws in Tennessee.

What will happen if you can’t repay a payday loan in Tennessee

Criminal charges are prohibited for borrowers who are unable to pay back their payday loan in Tennessee. While borrowers can’t go to jail being unable to repay, lenders can still file a lawsuit against you, get a judgment against you in court, or legally pursue the debt through the court systems. Lenders are not required to check a borrower’s ability to repay, meaning you enter into an agreement at your own risk. If you need assistance with your payday loans or other lending issues, contact the Tennessee Department of Financial Institutions. You can file a complaint on their website or use this tool to verify a lender’s license. 

What is the statute of limitations on payday loans in Tennessee?

In Tennessee, the statute of limitations on payday loans is six years. This means that if you are unable to pay back your loan, the lender has six years to try and collect the debt via the court system. 

How to consolidate your payday loans in Tennessee

Payday loan consolidation, also called credit consolidation and payday loan relief, is a strategy that lumps all of your loans together to give you a reduced, easy-to-understand monthly fee. Typically, borrowers work together with a third party that negotiates with creditors to lower the amount you owe. They will then set you up with one monthly payment. Borrowers make the fixed monthly payments directly to the debt consolidation companies rather than the creditors.

If your credit is good enough, consider taking out one bigger loan to pay off all of your smaller ones. It can help your monthly finances to have one set monthly payment rather than several smaller ones. Before consulting lenders, check your credit scores to see if you might qualify for a credit card with a 0% introductory interest rate. If you can qualify, and pay off the total before the introductory rate expires (usually 12-18 months), you can save hundreds or even thousands of dollars in interest.

But even if you don't qualify for a credit card offer (yet!), taking out one bigger loan with a fixed interest rate and using it to pay off your other loans can help you keep your monthly bills under control. Just remember that late fees and penalties will still apply if you miss payments. And if you choose to go this route, make sure that as soon as the loan money hits your account, you immediately use it to pay off your other debts. It won't be helpful if you end up spending the loan money on something else.

A debt management plan (DMP) is a third option. A DMP is similar to payday relief in that your debts are rolled into one big loan and you make one set monthly payment. The difference is that you’re still paying back the full total of your original loans. These are usually run by nonprofit credit counseling agencies, and they don't negotiate on your behalf with creditors to lower to total amount that you owe. In exchange, the monthly fee you'll pay them tends to be lower than debt consolidation company would charge. DMPs usually cost between $25 and $55 a month.

By the numbers: Payday lenders in Tennessee

  • Max loan term: 31 days
  • Average loan amount: $500
  • Maximum loan amount: $500
  • APR Cap: None, average is 460%
  • Number of payday lenders in Tennessee: 923 (as of 2018)
  • Average 14-day payday loan APR: 460%
  • Collection fees: $17.65 for $100 borrowed plus 15% of the amount of the loan
  • Poverty rate in Tennessee: 13.9%

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How can I get help paying my payday loan in Tennessee:

Though Tennessee has introduced various limitations on payday lending in recent years, borrowers still get taken advantage of every year. If you need assistance with your Tennessee payday loan, getting some form of payday loan relief is essential. Whichever debt consolidation method you decide on, it can be the first step back toward financial stability. Contact the Tennessee Department of Financial Institutions if you are in need of payday loan help. 

Tennessee Department of Financial Institutions

312 Rosa L Parks Ave 26th Floor

Nashville, TN 37243

Phone: 615-741-2236

Additional state resources to utilize:

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