Tennessee Code Annotated
Tenn. Code Ann. § 47-14-108 (2026)
Prepayment of loans - Contracts restricting prepayment of loans
✓ current as of May 2026
- (a) Except as limited by statutory provisions expressly applicable thereto, the privilege of prepayment of a loan, in whole or in part, and any refunds or premiums with respect thereto, shall be governed by contract between the parties.
- (b)
- (1) Any contract for a consumer loan that:
- (A) Either prohibits prepayment or imposes a penalty for prepayment; and
- (B) Is not subject to the federal Truth in Lending Act, compiled in 15 U.S.C. § 1601 et seq. and its implementing Regulation Z, compiled in 12 CFR 226 et seq.
shall state on its face in at least ten (10) point bold type in language separated from the other language in the contract by bold print dividing lines that it cannot be prepaid or that there is a penalty for prepayment.
- (2) If such contract does not comply with subdivision (b)(1), the provision prohibiting prepayment or imposing the prepayment penalty shall be unenforceable.
- (3) For purposes of this subsection (b), "consumer loan" means an extension of credit:
- (A) To one (1) or more natural persons;
- (B) Primarily for personal, family or household purposes; and
- (C) Secured by real property or secured by personal property used or expected to be used as the principal dwelling of the consumer.
- (1) Any contract for a consumer loan that:
Acts 1979, ch. 203, § 7; 2000, ch. 629, § 1; 2000, ch. 846, § 41.
Notes of Decisions
Cited in 4
cases, 1969–2000 · leading case: In Re McMurray, 218 B.R. 867 (Bankr. E.D. Tenn. 1998).
In Re McMurray, 218 B.R. 867 (Bankr. E.D. Tenn. 1998). “Tenn.Code Ann. § 47-14-108 which is applicable to loans in general states that "[e]xcept as limited by statutory provisions expressly applicable thereto, the privilege of prepayment of a loan, in whole or in part, and any refunds or premiums with respect thereto, shall be…”
In Re Clausel, 32 B.R. 805 (Bankr. W.D. Tenn. 1983). “§ 47-14-120 (1982) provides: The charging of a time-price differential shall not be deemed to bring a transaction within any regulation of interest, loans or loan charges, commitment fees or brokerage commissions, regardless of whether the seller disposes of the contract…”
Michael Smith v. Steve Futris v. Richard Feltus (Tenn. Ct. App. 2000). “” Tenn. Code Ann. § 47-14-108 (1995). Prepayment of a loan is not permitted absent an express contractual provision allowing for prepayment.”
Berke v. Reliance Ins. Co., 459 S.W.2d 172 (Tenn. Ct. App. 1969). “Section 47-14-108. Also the appellant cites and relies upon the general rule stated in 30 Am.”
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