Money talks, and it's speaking louder for Tennesseans who depend on loans. Commissioner Greg Gonzales of the Tennessee Department of Financial Institutions has put a number out there: 12.50 percent. Announced on March 5, this is the state's new maximum effective formula rate of interest. It's to be heard loud and clear until the Fed sings a different tune on the prime loan rate.
For those keeping score, that 12.50 percent means your loans in Tennessee just got more expensive by a ceiling of 4 percent over the weekly average prime loan rate, which the Federal Reserve placed at 8.50 percent on March 4, as per a statement on the department's website. Already wrestling with their wallets, borrowers will feel this update in their monthly paybacks.
As the state's financial referee, Greg Gonzales reminded us that this isn't personal – it's procedural. As per the 1983 legislation, which appears to have been keeping the beat on interest rates since the days of big hair and leg warmers, he's required to announce this pivot on the fiscal dance floor weekly. "The rate remains in effect until the average prime loan rate as announced by the Federal Reserve Bank changes," Gonzales stated.
