The Tennessee Department of Financial Institutions Commissioner Greg Gonzales has set the state's maximum effective formula rate of interest. As of September 24, 2024, borrowers in Tennessee will be facing interest rates that can climb as high as 12.30 percent per annum. This figure has been calculated with a 4 percent margin above the weekly average prime loan rate, which was reported at 8.30 percent by the Federal Reserve just the day before, on September 23.
According to a statement by the Department, this newly announced rate is not fixed—it will fluctuate in accordance with shifts in the average prime loan rate as announced by the Federal Reserve Bank. It is incumbent upon those impacted, whether they be individuals or businesses, to keep a watchful eye on these numbers, as they spell out the cost of borrowing money in real time, impacting loans, credit lines, and potentially the broader economic landscape of the state.
The task of announcing the formula rate of interest falls to Commissioner Gonzales weekly, a requirement that stems from a legislative act dating back to 1983. Chapter 464, Public Acts of 1983, dictates that Tennessee's financial arbiter compute and communicate this rate to the public, ensuring transparency and adherence to state regulations concerning lending practices.
