TN Increases Allowable Service and Closing Fees for Industrial Loan and Thrift Companies

Tennessee passed amendments increasing fees that an industrial loan and thrift company, industrial investment company, or industrial bank may charge to make and service various loans.  The amendments are effective July 1, 2021.

Under the new amendments to Title 45, Chapter 5, of the Tennessee Code Annotated, the total allowable service charge an industrial loan and thrift company (TILT) may institute has been increased to five percent (5%) of the total loan amount.  The former maximum was four percent (4%).  Additionally, while Section 45-5-403 was formerly silent as to closing fees, the amendments state a closing fee may be charged for an amount up to four percent (4%) of the amount financed, but must not be more than fifty dollars ($50.00).  However, TILT companies must refund the borrower a pro rata portion of the closing fee in cases in which the loan was repaid in full within 90 days of the date of the loan.

The amendments also replace the former tiered structure governing what TILT companies may charge as an installment maintenance fee, which was formerly $2.50-$3.50 per month, depending on the loan amount.  Under the new amendments, Section 45-5-403(a)(5)(A) will allow TILT companies to charge installment maintenance fees of up to $5 per month, without consideration to the total loan amount.