Tennessee Considers Multiple Bills Regarding Short-Term Loans

State examines possible regulations

The Tennessee General Assembly is wading through bills that would regulate title loans, payday loans, cash advances and other types of short-term loans. Both houses are considering multiple bills.

One bill would limit the APR on payday loans to 36 percent. Currently, payday loan providers generally do not charge an APR. Instead, they charge a flat fee, due at the time the loan is paid.

Car title loans

Some of the other bills don’t apply specifically to payday loans. Instead, they are targeted at car title loans, which usually are due in 30 days. In the case of these loans, borrowers put their cars up as collateral in the case that the loan is not repaid. The Tennessee legislature is considering limiting the administrative  fees on such loans.

Regulations already in place

Tennessee has been targeting the payday loan industry with limiting legislation for a few years now. Last year some counties passed laws limiting areas where payday lenders and title loan establishments could operate. One legislator pointed out that this decision might not be in the best interest of the consumer:

Said Commissioner Wyatt Bunker: “What we do to restrict them in number may backfire on us, because what you do is you lessen competition.”

Recognizing a need

Another commissioner said he has sympathy for people who could get cut off from short-term credit if the state regulates the industry into oblivion.

“I do have sympathy for individuals who have a difficult time securing needed financial resources from traditional lending sources. There is not an alternative in the mainstream banking and lending industry for them, and there is no willingness on the part of the mainstream banking and lending industry to service these individuals,” said Commissioner Henri Brooks.