Tennessee borrowers are looking at a higher threshold for interest rates on their loans, as announced by the state's financial overseer. Greg Gonzales, Commissioner of the Tennessee Department of Financial Institutions, let it be known Monday that local loan sharks can legally charge up to 12.50 percent per annum, predicated upon a prime rate of 8.50 percent, as reported by the Federal Reserve.

This spike is thanks to a formulaic ascendancy tethered to a 4 percent leap over the average prime loan rate, which was hoisted to 8.50 percent as of last week. The new rate declared by Commissioner Gonzales was declared to hold sway until a new average is declared by the Fed, according to a statement from the Tennessee Department of Financial Institutions.

The law in Tennessee, drawing from 1983's Chapter 464 of the Public Acts, mandates that the rate should be reviewed and adjusted weekly. Gonzales is tasked with this responsibility and continues to fulfill it, much to the interest of borrowers and lenders alike.

"The rate remains in effect until the average prime loan rate as announced by the Federal Reserve Bank changes," Gonzales noted, fastening expectations to the fluctuations of a market regulated by Federal oversight. He makes sure that Tennesseans are never too far from the financial pulse, adapting to the ebb and flow of rates that affect the lay of the land in terms of borrowing costs.