Tennessee borrowers have a new interest rate to keep an eye on. Commissioner Greg Gonzales of the Tennessee Department of Financial Institutions has confirmed that the state's maximum effective formula rate of interest is now set at 11.50 percent per annum. This announcement, made earlier this week, hinges on the current federal prime loan rate, which the Federal Reserve reported as 7.50 percent yesterday.
How does this stack up for locals looking to take out a loan? Published by the Tennessee Department of Financial Institutions, the formula rate encompasses a 4 percent increase over the Federal Reserve's weekly average prime loan rate. "The rate remains in effect until the average prime loan rate as announced by the Federal Reserve Bank changes," Commissioner Gonzales stated, providing a modicum of predictability amidst a financial landscape that often feels anything but.
This isn't a random number chosen to make or break the bank of Tennessee's borrowers. It's part of a regulated process dictated by Chapter 464 of the Public Acts of 1983, a piece of legislation that requires the commissioner of Financial Institutions to update this rate weekly. In times where every decimal point in an interest rate can translate into significant dollars on loan payments, this weekly announcement plays a key role in the financial planning of individuals and businesses alike.
