No licensee under this chapter has the power to charge premium loan charges other than, or in amounts greater than, the following:

(1) Licensees may charge, in the case of the precomputed loan, a service charge in an amount equal to four percent (4%) of the total amount of the loan, which charge may be deducted in advance from the principal of the premium loan; provided, that a licensee who contracts for the payment of interest on the balances from time to time outstanding, commonly referred to as a revolving or open-end account, shall be limited to contracting for a service charge not to exceed fifteen dollars ($15.00) and payable no more frequently than once per calendar year per premium loan account. This service charge shall be in lieu of all other compensation for services, expenses, detriments or commitments directly incident to the loan, except those charges that are otherwise specifically provided in this chapter. This charge is authorized and limited on the basis that it is generally reasonably related to the total costs and expenses that it is designed to cover, and in order to make the amount of the charges more certain and readily ascertainable by the registrants, their borrowers and the commissioner, and to that end registrants shall not be required to maintain detailed records with respect to the services, expenses, detriments or commitments covered thereby. This charge shall not, however, be imposed on that portion of a loan used to pay any existing loan or part thereof owing by the same borrower or spouse or both to the same licensee or any affiliated lender.

Terms Used In Tennessee Code 56-37-109

  • Attorney: means the person designated and authorized by subscribers as the attorney-in-fact having authority to obligate them on reciprocal insurance contracts. See Tennessee Code 56-16-102
  • Commissioner: means the commissioner of financial institutions. See Tennessee Code 56-37-102
  • Contract: A legal written agreement that becomes binding when signed.
  • Licensee: means a premium finance company holding a license issued under this chapter. See Tennessee Code 56-37-102
  • Premium finance agreement: means an agreement by which an insured or prospective insured promises to pay to a premium finance company the amount advanced or to be advanced under the agreement to an insurer or to an insurance agent or producing agent in payment of premiums of an insurance contract, together with interest and a service charge as authorized and limited by this chapter. See Tennessee Code 56-37-102
  • Usury: Charging an illegally high interest rate on a loan. Source: OCC
  • Year: means a calendar year, unless otherwise expressed. See Tennessee Code 1-3-105
(2)

(A) A premium finance agreement may provide for the payment by the insured of a delinquency charge of two dollars ($2.00) to a maximum of five percent (5%) of the delinquent installment on any installment, which is in default for a period of ten (10) days or more; provided, that the charge shall not be collected more than once for the same delinquency.
(B) If the default results in the cancellation of any insurance contract listed in the agreement, the agreement may provide for the payment by the insured of a cancellation charge of five dollars ($5.00).
(3) A premium finance agreement may provide for payment of collection costs, attorney‘s fees equal to fifteen percent (15%) of the outstanding indebtedness and any other charges that arose because one (1) party breached the contract.
(4) None of the charges referred to in this section shall be considered directly or indirectly in determining whether a violation of the usury laws has occurred under a premium finance agreement.
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