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2017 Tennessee Code
Title 45 - Banks and Financial Institutions
Chapter 12 - Flexible Credit Act
§ 45-12-111. Interest, fees, and charges.
Universal Citation: TN Code § 45-12-111 (2017)
- (a) Notwithstanding any other statutory limitation, a licensee authorized to make flex loans under this chapter may charge and collect interest, fees, and charges in a manner consistent with this section.
- (b) A licensee may charge and collect a periodic interest rate not to exceed twenty-four percent (24%) per annum.
- (c) (1) In addition to the periodic interest rate authorized under subsection (b), a licensee may also charge and collect a customary fee to defray the ordinary costs of opening, administering, and terminating a flex loan plan, including, but not limited to, costs associated with:
- (A) Underwriting and documenting the account;
- (B) Securing and maintaining account information;
- (C) Validating customer information;
- (D) Offering electronic and phone access to accounts;
- (E) Processing account transactions;
- (F) Responding to customer inquiries;
- (G) Providing periodic billing statements;
- (H) Inspection, verification, and protection of collateral and establishment, perfection, and release of the security interest; and
- (I) All other services or activities conducted by the licensee under the flex loan plan.
- (2) The customary fee shall not be deemed interest for any purpose of law and shall not exceed a daily rate of seven-tenths of one percent (0.7%) of the average daily principal balance in any billing cycle.
- (d) No flex loan plan under this chapter shall have an outstanding principal balance in excess of four thousand dollars ($4,000) at any time.
- (e) Any flex loan plan under this chapter shall require payment on or before the due date of each billing cycle in an amount sufficient to reduce any outstanding principal balance by at least three percent (3%) per calendar month.
- (f) (1) In the event a customer defaults under the terms of a flex loan plan and the licensee refers the customer's account to an attorney, including a regular salaried employee of the licensee, for collection, the licensee may:
- (A) If the flex loan plan so provides, charge and collect from the customer a reasonable attorney's fee; and
- (B) If the flex loan plan, or in the case of secured plans, the security agreement or similar instrument, so provides, recover from the customer all collection and court costs, including, in the case of secured plans, all costs of enforcing the security agreement or similar instrument actually incurred by the licensee, including those incurred on appeal.
- (2) A licensee may charge and collect interest following default of the customer or judgment in favor of the licensee at the periodic rate permitted by this section.
- (3) Disposition of property after default shall occur in a commercially reasonable manner in accordance with title 47, chapter 9, part 6.
- (g) If a check is returned to a licensee from a payer financial institution due to insufficient funds, no licensee shall have the authority to assess a handling charge against the maker or drawer of the returned check.
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