NASHVILLE, TN – In a significant financial announcement today, Tennessee Department of Financial Institutions Commissioner Greg Gonzales revealed a new maximum effective formula interest rate of 12.50 percent per annum for the state. This adjustment is directly tied to the current weekly average prime loan rate of 8.50 percent as announced by the Federal Reserve on March 11, 2024, plus a statutory margin of 4 percent.
This rate determination is in accordance with Chapter 464, Public Acts of 1983, which mandates the commissioner to weekly announce the state’s formula rate of interest. The legislation’s intent is to provide clarity and consistency for financial transactions within the state, ensuring that both lenders and borrowers have a clear understanding of the maximum permissible interest rates.
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The new rate, which is set to remain in effect until a change in the Federal Reserve’s announced average prime loan rate, reflects the dynamic nature of financial markets and the state’s regulatory stance in responding to these changes. Commissioner Gonzales highlighted the importance of the regulation in maintaining a balanced financial environment in Tennessee, ensuring that the interests of both the financial institutions and the consumers are safeguarded.
This announcement is particularly noteworthy for financial institutions, businesses, and consumers planning to engage in lending or borrowing activities in the near future. The adjusted formula rate will directly influence the cost of loans and the returns on savings, impacting financial decisions and strategies across the state.
For more information on the new formula interest rate and its implications, stakeholders are encouraged to contact the Tennessee Department of Financial Institutions.
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