What a title loan costs — before Tennessee’s rules
A title loan is usually a single-payment loan due in 15–30 days at around 25% per month — roughly 300% APR — secured by your vehicle. The defining risk is not the rate but the collateral: miss a payment and the lender can repossess the car, and research finds about one in five borrowers eventually loses the vehicle. Where a state caps rates low, single-payment title lending is not offered and a loan above the cap is generally void.
The law in Tennessee
- Rate cap
- Effective interest capped at 2% per month, but the lender may also charge a customary fee of up to one-fifth (20%) of the original principal (or unpaid balance on renewals) per month. Combined, this yields an effective APR of roughly 264%.
- Key law
- Tennessee Title Pledge Act, Tenn. Code Ann. Sec. 45-15-101 to 45-15-123; rate/fee provisions at Sec. 45-15-111.
- Enforcement
- Licensed and regulated by the Tennessee Department of Financial Institutions (TDFI), Compliance Division, which registers title-pledge lenders and handles consumer complaints.
Under Tenn. Code Ann. Sec. 45-15-111, a title-pledge lender may charge 2% monthly interest plus a fee up to one-fifth of the principal, producing an effective APR near 264%.
What it means for a Tennessee borrower
Auto title loans are legal and widely available in Tennessee. Although the stated interest is 2% per month, an additional monthly fee of up to 20% of the loan pushes the true annual cost to around 264%. Loans are typically 30-day title pledges that can be renewed.
Before you borrow in Tennessee
- Check whether the lender is licensed in Tennessee — many high-cost online lenders are not.
- Revoke ACH authorization in writing to stop automatic withdrawals from your account.
- File a complaint with the Tennessee attorney general and the CFPB.
- Ask whether the balance is even collectable under Tennessee law before you pay a collector.
Cheaper first — try these before a title loan in Tennessee
Title Loans and tribal lenders in Tennessee
Many online lenders that market title loans to Tennessee residents are tribal lenders arguing their sovereignty places them outside state rate caps — a separate legal question this site tracks in depth. For which tribal brands lend to Tennessee residents and how state law applies to them, see the Tennessee tribal-lending page.
Tribal loans in Tennessee →Frequently asked questions
Are title loans legal in Tennessee?
In Tennessee, single-payment auto title loans are legal and enforceable, commonly around 300% APR, with the car as collateral. The speed is real; so is the repossession risk. Check the total cost and never pledge the car you rely on to get to work.
What is the maximum title loan rate in Tennessee?
Effective interest capped at 2% per month, but the lender may also charge a customary fee of up to one-fifth (20%) of the original principal (or unpaid balance on renewals) per month. Combined, this yields an effective APR of roughly 264%.
What can I do about a title loan I already have in Tennessee?
Tennessee allows this lending, so the loan is generally enforceable — but you can still revoke ACH authorization in writing, avoid taking a second loan to cover the first, and file a complaint with the Tennessee attorney general or the CFPB if the lender breaks the rules.