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State rules

Tennessee auto loan rules

Tennessee has 345 Census places covered on AutoLoanable, with a combined estimated population of 4,299,892. Vehicle financing in Tennessee is governed by state law — the interest-rate caps, title-lending rules, sales-finance licensing and the regulator that oversees them. The sourced figures below apply to every car loan made to a borrower in the state.

By the AutoLoanable Editorial Team · Last updated 2026-09-17

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10.75% cap state usury cap
7% statewide state vehicle sales tax
Permitted vehicle title loans
TDFI state regulator

Key rules for car buyers in Tennessee

RuleDetailSource
Maximum legal interest rate (usury cap) 10.75% per annum (maximum effective formula rate for written contracts, announced September 15, 2026)
Source says: the maximum effective formula rate of interest in Tennessee is 10.75 percent per annum		 Tennessee Department of Financial Institutions (TDFI)
as of 2026-09-17
Vehicle title loan status Title pledge lending is licensed; a title pledge agreement is a 30-day loan secured by the vehicle title, with interest capped at 2% per month plus a customary fee of up to 1/5 of principal (max $2,500 per certificate of title).
Source says: "Title pledge lenders may charge interest at a rate not to exceed 2% per month and a customary fee of no more than 1/5 of the original principal amount of the loan" License category: Title pledge lender license (Tennessee Department of Financial Institutions).		 Tennessee Department of Financial Institutions — Biennial Report on the Title Pledge Industry; Tenn. Code Ann. § 45-15-114
as of 2026-09-17
Sales finance / installment lender licensing TDFI Compliance Division licenses industrial loan & thrift companies, deferred presentment companies, flexible credit companies, and other consumer lenders
Source says: The Compliance Division is responsible for the licensing and regulatory supervision of the following types of financial institutions operating in Tennessee Motor-vehicle retail installment sales are separately governed by the Tennessee Retail Installment Sales Act (general installment sales law; no separate motor-vehicle act) (Tenn. Code Ann. § 47-11-101 et seq.).		 Tennessee Department of Financial Institutions (TDFI)
as of 2026-09-17
State lending regulator Tennessee Department of Financial Institutions (TDFI)
Source says: The Department regulates banks, credit unions, trust companies, business and industrial development corporations, industrial loan and thrift companies		 Tennessee Department of Financial Institutions (TDFI)
as of 2026-09-17
Sales tax on vehicle purchases 7% state rate; local rates additional
Source says: "The general state tax rate is 7%."		 Tennessee Department of Revenue — Sales and Use Tax
as of 2026-09-17

How to use these rules

  1. Check the ceiling before you compare offers

    If a quoted APR looks extreme, compare it against the Tennessee cap above — and note that a specific statutory exemption can apply to a particular product.

  2. Verify the lender is licensed

    Use the regulator named in the table to confirm the lender or sales-finance company may legally serve borrowers in the state.

  3. Know what is secured against your car

    A vehicle title loan is secured by the car itself. If the state permits it, understand the repossession terms before you sign anything.

  4. Budget for tax and fees separately

    Sales tax and title fees are financed along with the car, so they raise the amount you borrow — and therefore the interest you pay on them.

Cities in Tennessee

We cover 345 Census places in Tennessee.

Frequently asked questions

What interest rate can a lender charge on a car loan in Tennessee?
It depends on the product and the statute that governs it. The sourced table on this page lists Tennessee's usury cap, its motor-vehicle sales-finance rules and the licensing requirements, each with its publisher and a link to the primary source.
Are title loans legal in Tennessee?
Vehicle title lending is regulated state by state; some states permit it under a licensed lender, some cap it, and some prohibit it outright. See the sourced figure on this page for the current position, and confirm it with the state regulator before you sign anything.
Do I need a license to finance a car in Tennessee?
Most consumer lenders and motor-vehicle sales-finance companies must be licensed by the state regulator named on this page. You can verify a lender's licence with that regulator before you sign anything.

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