Tennessee Payday Loan Laws: The Ultimate Legislative Guide

Payday loans have short repayment terms, high interest rates, and small principal balances. Because they frequently trap borrowers in a cycle of debt, some state governments limit or prohibit them, but that’s not true of the entire country. Here’s what you should know about the Tennessee payday loan laws if you live in the state.

Payday lending status in Tennessee: Legal

Though there are minor restrictions on the industry, payday lending is legal in Tennessee. Lenders can charge fees as high as 15% of the face value of the customer’s post-dated check.

Don’t confuse that with a 15% interest rate because it’s much higher. For example, you can receive a $425 loan with a $75 fee and a repayment term of two weeks.

To get your funds, you’d have to give a post-dated check to the payday lender for $500. Once your payday loan comes due, they’d cash the check. 

$75 divided by $500 equals 15%, so they’re within the legal limits. However, you only actually borrowed $425. $75 divided by $425 equals 17.65%. That works out to 1.26% per day and a 460% annual percentage rate (APR).

The section of the Tennessee Code that regulates payday loans is Title 45, Title 45 – Banks and Financial Institutions, Chapter 17 – Deferred Presentment Services.

READ MORE: States where payday loans are illegal

Stuck in payday debt?

If you’re a Tennessee resident, DebtHammer may be able to help.

Loan terms, debt limits, and collection limits in Tennessee

  • Maximum loan amount: $500
  • Maximum Interest Rate (APR): 460% on a 14-day loan
  • Minimum loan term: N/A
  • Maximum loan term: 31 days
  • Number of rollovers allowed: None
  • Number of outstanding loans allowed: Three total; two per lender
  • Cooling-off period: N/A
  • Finance charges: 15% of the face amount of the repayment check
  • Collection fees: N/A
  • Criminal action: Prohibited

Payday lenders thrive on giving small loans with short repayment terms that are deceptively expensive. These attributes make it a lot more likely that borrowers will default on their loans, struggle to stay afloat financially, and continue to rely on debt to sustain themselves.

Because payday lenders generally don’t check their borrowers’ credit scores, they naturally attract people with few other credit options. Even those who realize payday loans are prohibitively expensive can’t get affordable loans elsewhere.

The Tennessee payday loan laws enable payday lenders to follow this strategy with impunity. Feel free to examine the original regulations for more information.

Tennessee payday loan laws: How they stack up

Despite the significant evidence pointing to the fact that payday loans usually harm borrowers more often than they help them, payday loans are still legal in most of the United States. Roughly thirty states, including Tennessee, still allow the industry to operate to some degree.

Tennessee still ended up with two cities on the list of the top 10 cities with the worst payday lending problems.

Here’s a closer look at the Tennessee payday loan laws to help you understand how they stack up with the rest of the country.

READ MORE: How to get out of payday loan debt

Maximum loan amount in Tennessee

In Tennessee, lenders can’t accept post-dated checks with an aggregate face value of more than $500 from any borrower. In addition, they can’t have more than two checks from a borrower at any one time, and a borrower can have no more than three checks at any one time.

That means you can’t have more than $500 in principal and interest outstanding for payday loans at any time, whether the amount is split up between multiple lenders or concentrated in just one.

You can split those $500 between up to three contracts, but you can’t have more than two with any lender. If, for example, you have two post-dated checks for $150 on file with a lender as part of a payday loan, you’ll have to go to another one to borrow more.

If you agree to a third contract but still fail to reach your $500 maximum face value, you can’t use the rest of it until you fulfill one of the loan agreements. 

READ MORE: Payday loan consolidation and relief that works

What is the statute of limitations on a payday loan in Tennessee?

A statute of limitations is a period during which a debt collector can sue you for your debts in delinquency or default. Once it expires, a court can no longer order you to pay the amount or let the collector garnish your wages.

In Tennessee, the statute of limitations on debt is six years. After that passes, your payday lender can’t come after you.

Rates, fees, and other charge limits in Tennessee

The Tennessee payday loan laws prohibit payday lenders from charging a fee worth more than 15% of the face value of the repayment check. That means they can’t collect more than $17.65 for every $100 borrowed. For example, a payday lender could charge you $70.50 for a $400 loan.

Because of this, you’ll rarely, if ever, see payday lenders offer loans for more than $425. They’d have to lower their finance fee a dollar for every dollar they raise their principal over $425.

That ratio works out to a minimum APR of 207.8%. If the loan is for any less than 31 days, the APR will increase. On one-week and two-week loans, it works out to APRs of 920% and 460%, respectively.

Maximum term for a payday loan in Tennessee

Payday loans can have a maximum repayment term of 31 days in Tennessee. However, there is no minimum, which means lenders can offer loans that give even less than a pay period to pay.

Fortunately, the Tennessee payday loan laws prohibit lenders from letting borrowers roll their loans over. Lenders can’t renew or consolidate one payday loan into another. Any agreement to do so is unenforceable.

How many payday loans can you have in Tennessee?

Tennessee residents are limited to three payday loans at once, with a maximum of two loans from the same lender. However, lenders may not be willing to issue two payday loans to the same borrower. Though payday lenders don’t report loans to the three major credit bureaus, they have a reporting system of their own, so if you already have a couple of outstanding payday loans — or have defaulted on a previous payday loan — the new lender will typically be aware.

There’s also no overall limit to the number of payday loans you can have, so once you pay off your original loan, you’re immediately eligible for a new loan. However, this isn’t recommended.

READ MORE: Can you have multiple payday loans?

Are tribal loans legal in Tennessee?

Native American tribes are sovereign nations in the United States. That means they’re generally immune to state regulations and it’s hard to sue them for breaching the laws of the states they reside in, though they usually follow applicable federal laws.

Tribal lenders are a type of short-term loan provider that partners with Native tribes to try and share in their tribal immunity. They use that as an excuse to sidestep the regulations meant to protect consumers, such as the rate restrictions on payday loans.

Tribal lenders are technically legal in Tennessee. There are no prohibitions on offering lending services from a Native American reservation. However, lenders must be licensed by Tennessee’s Department of Financial Institutions. Because tribal lenders aren’t willing to follow state laws, they typically will not meet licensing requirements. If your loan is from an unlicensed lender, it may not be legally collectible and you may not have to repay it.

If you suspect that you’ve borrowed money from an unlicensed lender, please talk to a Legal Aid attorney to discuss your next steps.

READ MORE: Is my payday loan lender licensed?

Consumer information

The Tennessee Department of Financial Institutions regulates financial service providers in the state. Deferred presentment service providers, or payday lenders, fall under its jurisdiction.

The department’s mission is to foster a system of financial institutions that’s safe for consumers and sustainable for institutions. They aim to promote access to equitable credit for consumers and ensure that service providers comply with governing law.

READ MORE: How to get out of high-interest tribal loans

Where to make a complaint

The Tennessee Department of Financial Institutions is also the best place to register a complaint about illegal payday lending activities within the state. Here’s the contact information: 

  • Regulator: Tennessee Department of Financial Institutions
  • Address: 312 Rosa L. Parks Avenue, 26th Floor, Nashville, TN 37243
  • Phone: (615) 741-2236
  • Email: [email protected]
  • Link to website: https://www.tn.gov/tdfi/tdfi-how-do-i/file-a-complaint.html

Consumers can also submit a complaint to the Consumer Financial Protection Bureau (CFPB). They are a federal organization dedicated to assisting consumers in dealings with financial institutions, including payday lenders.

Number of Tennessee consumer complaints by issue

These statistics are all according to the CFPB Consumer Complaint Database.

Complaint ReasonCount
Charged fees or interest you didn’t expect182
Struggling to pay your loan102
Can’t contact lender or servicer54
Problem when making payments48
Can’t stop withdrawals from your bank account39
Problem with the payoff process at the end of the loan29
Received a loan you didn’t apply for20
Money was taken from your bank account on the wrong day or for the wrong amount19
Getting the loan18
Incorrect information on your report14
Improper use of your report10
Applied for loan/did not receive money8
Loan payment wasn’t credited to your account8
Problem with additional add-on products or services8
Payment to acct not credited7
Vehicle was repossessed or sold the vehicle5
Problem with a credit reporting company’s investigation into an existing problem5
Was approved for a loan, but didn’t receive the money4
Credit monitoring or identity theft protection services3
Complaints reasons in Tennessee by category
Source: CFPB website

The most complained about lender in Tennessee: Harpeth Financial Services, LLC

Harpeth Financial Services, LLC is the most complained about lender in Tennessee. It’s the parent company for the brand Advance Financial 24/7, a short-term installment loan and line of credit provider.

In Tennessee, they only offer lines of credit. While these aren’t payday loans and don’t count as deferred presentment transactions under Tennessee law, they can be almost as expensive.

For example, if you take seven days to pay back a cash advance from your line of credit for $300, you’d pay a finance charge of $16.08. That works out to an APR of 279.5%.

If you’re a consumer living in Tennessee, you should consider Harpeth Financial Services and Advance Financial 24/7 as dangerous as any other payday lender in the state and stay away.

Most common complaints about Harpeth Financial Services

Complaint ReasonCount
Charged fees or interest you didn’t expect47
Can’t stop withdrawals from your bank account16
Struggling to pay your loan14
Can’t stop charges to bank account7
Problem with the payoff process at the end of the loan6
Money was taken from your bank account on the wrong day or for the wrong amount5
Problem when making payments4
Payment to acct not credited1
Problem with additional add-on products or services1
Was approved for a loan, but didn’t receive the money1
Harpeth Financial Services, LLC complaint reasons in Tennessee by category
Source: CFPB website

By far, the most common complaint consumers make about Harpeth Financial Services, LLC is that they charge unexpected fees or interest. The CFPB has received 47 complaints about the lender’s prices since 2013.

There’s a significant gap between that and the second-place issue: the inability to stop Harpeth’s withdrawals. There have been just 16 instances of that complaint during the same period.

That’s no surprise, given the unusually high costs of their credit accounts. We don’t recommend working with a payday lender, and we wouldn’t suggest Harpeth Financial Services or their subsidiary Advance Financial 24/7 as suitable replacements either.

Top 10 most complained about payday lenders

LenderNo. of complaints since 2013Primary complaint reason
Harpeth Financial Services, LLC95Charged fees or interest you didn’t expect
CURO Intermediate Holdings39Charged fees or interest you didn’t expect
Cash Express, LLC34Struggling to pay your loan
Enova International, Inc.30Charged fees or interest you didn’t expect
Community Choice Financial, Inc.23Can’t contact lender
Big Picture Loans, LLC17Charged fees or interest you didn’t expect
Thaxton Investment Corporation17Problem when making payments
TMX Finance LLC16Struggling to pay your loan
Populus Financial Group, Inc.16Can’t contact lender
OneMain Financial Holdings, LLC13Problem when making payments
The most payday lender complaints by lender and reason in Tennessee by category
Source: CFPB website

Harpeth Financial Services is the lender consumers complain about most in Tennessee by far, but many others get negative attention too. In a state where payday lending is legal, that’s almost a given. Several of the names on the list belong to payday lenders, including Populus Financial Group, Cash Express, and CURO Holdings.

The Most Complained About Tribal Lender in Tennessee: Big Picture Loans, LLC

Payday lenders are notorious for their ability to find loopholes in regulations and continue peddling their usurious products. One of the strategies they’ve taken is to partner with Native American tribes and create documents that establish them as an extension of the tribe.

They use that excuse to ignore state regulations in the name of tribal immunity, which refers to the protections against lawsuits for Native American tribes as sovereign nations within the United States.

Big Picture Loans, LLC is the most commonly complained about tribal lender in Tennessee. They provide short-term installment loans, which are essentially payday loans with slightly longer terms.

Big Picture Loans is an arm of the Lac Vieux Desert Band of Lake Superior Chippewa Indians. Their typical loan terms are:

  • Principal balances of $400 to $3,500
  • APRs ranging from 35% to 699% (the minimum rate for new customers is 350%)
  • Repayment terms of 4 to 18 months

As you can see, these aren’t any better terms than that of a traditional payday lender. Getting an extra three months won’t help anyone much if the APR is the same and the loan balance is even higher.

If you’re having financial trouble because of Big Picture Loans or any other tribal lender, DebtHammer can help you turn it around. Request a free quote today, and we’ll show you how to get out of the payday loan trap once and for all.

Most Common Complaints About Big Picture Loans, LLC

Complaint ReasonCount
Charged fees or interest you didn’t expect10
Can’t stop charges to bank account2
Struggling to pay your loan1
Was approved for a loan, but didn’t receive the money1
Applied for loan/did not receive money1
Getting the loan1
Can’t contact lender1
Big Picture Loans, LLC complaint reasons in Tennessee by category
Source: CFPB website

The most common complaint people have about Big Picture Loans is that the company charges unexpected fees or interest. That’s a little ironic because you probably expected it to be precisely that. 

Big Picture Loans might not be an official payday lender, but they’re even more dangerous. Their interest rates are just as high as payday lenders’, and they’re even more willing to skirt state regulations because of the tribal immunity argument.

Payday loan statistics in Tennessee

  • Tennessee ranks as the 8th state for the most overall payday loan complaints.
  • Tennessee ranks as the 4th state for the most payday loan complaints per capita.
  • There have been 18,281 payday loan-related complaints made to the CFPB since 2013―584 of these complaints originated from Tennessee.
  • The estimated total population in Tennessee is 6,833,174 people.
  • There are 8.5465 payday loan complaints per 100,000 people in Tennessee.
  • The second-most popular reason for submitting a payday loan complaint is “Struggling to pay your loan.”

READ MORE: Payday loan debt statistics

Historical timeline of payday loans in Tennessee

Tennessee isn’t one of those battleground states where politicians consistently debate the fate of payday lending. The Tennessee payday loan laws have favored the industry for many years. Here’s a quick overview of the highlights:

  • 1993: Allan Jones, the alleged father of the modern payday lending industry, founded Check Into Cash. In 2021, it’s still one of the largest payday lenders in the country.
  • 2010: The Deferred Presentment Services Act passes. The Act introduces the limit on finance charges to 15% of the check face value and caps loans at $500. It still regulates payday loans in Tennessee in 2021.
  • 2014: A bill in Nashville passes that prohibits payday lenders from setting up shop within a quarter-mile of each other.

As you can tell, the history of payday loans in Tennessee has been rather uneventful. The lending industry is in full swing, and there doesn’t seem to be much legislative interest in changing that anytime soon.

Flashback: A Tennessee payday loan story

The year is 1999, and a woman named Delaney lives in a two-bedroom apartment in Cleveland, Tennessee. She’s a mother of two and recently began taking care of her newborn granddaughter as well.

One day, she couldn’t quite make ends meet with the income from her job as a hospital food service worker. However, her friend told her about a new lender called Check Into Cash that gave loans in exchange for a post-dated check.

She visited the store and borrowed $200 from them for a $38 fee, which they said they’d try to collect by cashing her check in two weeks.

They tried to cash the check on schedule, but there wasn’t enough money in Delaney’s bank account. They offered to let her push back the due date to her next payday, two weeks later, for another $38 fee.

Over the next year, she paid $1,220 in rollover fees for the loan, but she didn’t manage to pay off the principal balance.

The bottom line: Should I take out a payday loan in Tennessee?

Payday loans are one of the most dangerous forms of borrowing in the United States. They have such excessive interest rates and short repayment terms that it’s unlikely most consumers could afford to pay them on time. Payday loans can quickly trap you in a vicious cycle of debt, so it’s best to avoid them in Tennessee.

If you have a bad credit score, you can still qualify for affordable financing. If all you need is a few hundred dollars, consider using a cash advance app like Dave or Earnin until you can rebuild your credit and use more sustainable financing. Even better, find ways to cut your expenses or increase your income and stop having to rely on debt.

If you’re a Tennessee resident struggling with payday loans, let us help you. DebtHammer can put the hurt on your lenders and show you how to get out of debt forever. Contact us today for a free quote to get started!

Scroll to Top