RESOLUTION NO. RS2010-1482

A resolution requesting the Davidson County Delegation to the Tennessee General Assembly to introduce and support legislation to further limit the amount of finance charges and fees cash advance establishments can charge.

WHEREAS, establishments offering deferred presentment services, also commonly known as cash advance or payday loans, are regulated by Tennessee Code Annotated §§ 45-17-101, et seq.; and

WHEREAS, Tennessee law allows cash advance establishments to make payday loans not to exceed an aggregate total of $500 outstanding at any one time; and

WHEREAS, Tennessee law further provides that the term for such loans is not to exceed 31 days, but the law provides no limit on the number of extensions; and

WHEREAS, cash advance establishments in Tennessee may charge a fee to cover operational costs not to exceed the lesser of $30 or 15% of the loan amount; and

WHEREAS, once all fees and charges permitted by law have been added to a two-week $100 cash advance loan, the effective annual percentage rate (APR) amounts to approximately 459%; and

WHEREAS, customers of cash advance establishments are typically unable to secure other short-term loans at more reasonable interest rates, and are thus forced to pay these higher finance charges that greatly impact their ability to achieve financial stability; and

WHEREAS, it is fitting and proper that the Tennessee General Assembly limit the amount of finance charges and fees cash advance establishments may charge to a maximum APR of 150%.

NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE METROPOLITAN GOVERNMENT OF NASHVILLE AND DAVIDSON COUNTY:

Section 1. That the Metropolitan County Council hereby goes on record as requesting the Davidson County Delegation to the Tennessee General Assembly to introduce and support legislation to further limit the amount of finance charges and fees cash advance establishments can charge to a maximum APR of 150%.

Section 2. That the Metropolitan Clerk is directed to send a copy of this Resolution to each member of the Davidson County Delegation to the Tennessee General Assembly.

Section 3. That this Resolution shall take effect from and after its adoption, the welfare of the Metropolitan Government of Nashville and Davidson County requiring it.

Sponsored by: Jamie Hollin