47-14-108 - Prepayment of loans Contracts restricting prepayment of loans. - Tennessee Statutes

47-14-108. Prepayment of loans Contracts restricting prepayment of loans.

(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 provisions of the Federal Truth in Lending Act, 15 U.S.C. § 1601 et seq. and its implementing Regulation Z, 12 C.F.R. § 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 the provisions of subdivision (1), the provision prohibiting prepayment or imposing the prepayment penalty shall be unenforceable.

     (3)  For purposes of this subsection, “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.

[Acts 1979, ch. 203, § 7; 2000, ch. 629, § 1; 2000, ch. 846, § 41.]