Payday Loans and Cash Advance in Tennessee

Legal under the Deferred Presentment Services Act. Below: the law, the limits, what $300 costs here, who regulates it, and how to request a cash advance online in Tennessee.

Is a Cash Advance Legal in Tennessee?

Payday loans are legal in Tennessee. The Deferred Presentment Services Act, Tenn. Code Ann. 45-17-101 and following, lets a lender licensed by the Tennessee Department of Financial Institutions accept your check, give you cash, and hold the check for up to 31 days for a fee of no more than 15% of the check's face amount. A lender, together with any company under common ownership, may hold no more than two of your checks at once, and the combined face value of those checks cannot exceed $500. Rolling a loan into a new one with the same lender is prohibited, and the lender cannot add returned check charges, attorney fees, or the threat of criminal prosecution when a check bounces. Tennessee also allows a second, larger product called a flex loan under the Flexible Credit Act, an open-end line of up to $4,000 at 24% interest plus a daily fee of up to 0.7% of the balance, which many former payday storefronts now offer. Both products are expensive: a two-week payday loan at the full 15% fee is roughly a 460% APR. The Department licenses and examines every provider, including those that lend over the internet, and takes complaints from borrowers.

The governing law is Tennessee Deferred Presentment Services Act; Tennessee Flexible Credit Act (Tenn. Code Ann. 45-17-101 et seq., fees and limits at 45-17-112; Tenn. Code Ann. 45-12-101 et seq., charges at 45-12-111).

Loan Limits and Terms in Tennessee

Tennessee's fee is 15% of the face amount of the check, not of the cash you receive, so the arithmetic runs backward from the check. If you want $300 in hand, the check is about $352.94 and the fee is the $52.94 difference. The $500 ceiling is on the combined face of up to two checks held by one lender and any company related to it by common ownership, so two loans of $250 with the same lender is the most that lender can do. The Act does not have a statewide database, so the limit is enforced per lender rather than per borrower. Rollovers with the same lender are banned, but nothing stops a borrower from going to a different licensee, which is how many Tennesseans end up with several payday loans at once. Flex loans are a different product with different rules and no term limit.

What a $300 Loan Costs in Tennessee

Tenn. Code 45-17-112 caps the fee at 15% of the face amount of the check. To receive $300 in cash, the check must be 300 / 0.85 = $352.94, so the fee is 352.94 x 0.15 = $52.94 and you repay $352.94 when the check is presented. On a 14-day hold, APR = 52.94 / 300 x 365 / 14 = 4.60, or about 460%. Over the maximum 31 days the same fee is about 208% APR.

Run your own numbers with the cash advance calculator.

Consumer Protections and Who to Call in Tennessee

• No company may offer deferred presentment services in Tennessee, including over the internet, by fax, or by phone, without a license from the Department of Financial Institutions, which examines licensees and investigates complaints.
• The fee is capped at 15% of the face amount of the check, the hold period cannot exceed 31 calendar days, and the lender must give you a written explanation of the fees and deposit date before the transaction is completed.
• A lender and its affiliates may hold no more than two of your checks at one time, with a combined face value of no more than $500, which limits how deep you can go with any single company.
• Rollovers are prohibited: a licensee cannot renew or consolidate your loan using the proceeds of another deferred presentment transaction it makes, so each loan must be paid off with your own money.
• If your check is returned unpaid, the lender cannot charge a returned check handling fee or attorney fees on the check, and you cannot be criminally prosecuted for a check issued under the Act.
• You must receive a receipt documenting every term of the transaction, and the federal Military Lending Act caps the total cost for active duty service members and their dependents at 36% APR.

Complaints and licence checks go to the Tennessee Department of Financial Institutions: 615-741-2236, www.tn.gov/tdfi, or file a complaint at the regulator's complaint page. The federal CFPB also takes complaints about any lender.

Online vs Storefront Lenders in Tennessee

Tennessee amended its Deferred Presentment Services Act so that internet lending is expressly covered: no person may engage in deferred presentment services through the internet, facsimile, telephone, or other means without first obtaining a license from the Department of Financial Institutions. The Department has published a consumer notice on the change and keeps a public list of licensed deferred presentment providers, which is the first thing to check before you give an online lender your bank details. A licensed online lender is bound by the same 15% fee cap, 31-day maximum, two-check limit, and rollover ban as a storefront. Unlicensed online lenders, including some that claim tribal affiliation, still advertise to Tennessee residents, and the Department has limited power over a company that never applied for a license. If you are dealing with one, the Department can still take your complaint at 615-741-2236 or 800-778-4215 and refer you to the Consumer Financial Protection Bureau or the Federal Trade Commission. Storefront lenders are common across the state and many have shifted to flex loans, which are also licensed and examined by the Department under the Flexible Credit Act.

Alternatives If a Payday Loan Is Not the Right Fit

Tennessee's flex loan is the product most storefronts push as the alternative to a payday loan, but it is not cheap. Under the Flexible Credit Act a licensee can open a line of credit of up to $4,000, charge 24% annual interest, and add a customary fee of up to 0.7% of the average daily balance per day, which adds up to more than 255% a year before interest. You must pay down at least 3% of the principal each month, and there is no fixed end date. A better option for most people is a payday alternative loan from a federal credit union, capped at 28% APR by the National Credit Union Administration for amounts from $200 to $2,000. Tennessee also licenses industrial loan and thrift companies and consumer installment lenders that make small loans repaid over months. An advance from your employer, a payment arrangement with the creditor you owe, or help from a community action agency or the 211 line for a utility or rent emergency will usually cost far less than either payday or flex credit.

Compare the installment loan and payday alternative loan options before you decide.

Frequently Asked Questions

Nearby States

• KentuckyThe fee cap, a worked example and the regulator to call in Kentucky.
• VirginiaThe fee cap, a worked example and the regulator to call in Virginia.
• North CarolinaThe fee cap, a worked example and the regulator to call in North Carolina.
• GeorgiaThe fee cap, a worked example and the regulator to call in Georgia.
• AlabamaThe fee cap, a worked example and the regulator to call in Alabama.
• MississippiThe fee cap, a worked example and the regulator to call in Mississippi.
• ArkansasThe fee cap, a worked example and the regulator to call in Arkansas.
• MissouriThe fee cap, a worked example and the regulator to call in Missouri.