A Tennessee promissory note is a formal, signed agreement committing the borrower to repay a specified sum to the lender within an agreed-upon period. The borrower may need to pay interest at a legally permissible rate.
This document is useful for personal and business loans, outlining critical loan aspects such as the repayment schedule, principal amount, interest rate, and collateral (if applicable) that the borrower pledges for loan security. Promissory notes’ enforceability ensures lenders have recourse in case the borrower can’t finish making the payments they owe.
Laws: Title 47, Chapter 3 of the TN Code governs the creation and implementation of promissory notes.
Statute of Limitations: Six years (§ 47-3-118).
By Type
Usury Laws and Interest Rates
Promissory notes must comply with Tennessee’s usury laws, which you can find in Chapter 14 (Interest Rates Generally) and Chapter 15 (Interest on Home Loans):
- Without Contract (§ 47-14-103(3)): 10% per annum.
- For Government-Issued Contracts (§ 47-14-103(2), TN Dept. of Financial Institutions): 7.25%.
- For Home Loans (§ 47-15-102(c), TN Dept. of Financial Institutions): No more than 2% above the current rate established by the Federal National Mortgage Association; Maximum rate of 18% per annum.
- For Small Single-Payment Loans of One Year or Less (§ 47-14-104(a)(1)): 10% if a single-payment loan is for $1,000 or less.
