Tennessee Unsecured Promissory Note Overview
An unsecured promissory note in Tennessee is a loan agreement where the borrower promises to repay without pledging any collateral. The lender relies on the borrower's creditworthiness and the legally enforceable promise to pay. The maximum interest rate in Tennessee is 10% (default).
10% default rate; 24% maximum for written contracts; no limit for business loans to corporations. Unsecured notes carry more risk for the lender, so interest rates are typically higher than secured notes. However, the rate must still comply with Tennessee's usury laws.
If the borrower defaults, the lender's primary remedy is filing a lawsuit within Tennessee's statute of limitations (6 years (oral and written)). The small claims court limit in Tennessee is $25,000, which is ideal for smaller unsecured loans.
10% (default)
Usury rate cap
6 years
Statute of limitations
$25,000
Small claims limit
25%
Max garnishment
Tennessee Legal Requirements
Tennessee has specific requirements for unsecured promissory notes:
Important: Tennessee Usury Laws
Tennessee's maximum interest rate is 10% (default). 10% default rate; 24% maximum for written contracts; no limit for business loans to corporations. Exceeding this limit may void the interest or result in penalties.
- Written Agreement: Must be in writing, signed by borrower, clearly stating loan terms
- Compliant Interest Rate: Must not exceed Tennessee's 10% (default) usury cap
- No Collateral Statement: Explicitly state that the note is unsecured with no collateral pledged
- Default Provisions: Events of default, cure period, acceleration clause, and collection remedies
- Personal Guarantee: Recommended for business borrowers to protect the lender
- Governing Law: Specify Tennessee law as the governing jurisdiction
Collection Remedies in Tennessee
If a borrower defaults on an unsecured promissory note in Tennessee, the lender has several collection options:
Send a Formal Demand Letter
Written notice demanding payment within a specified timeframe, creating a paper trail
File in Small Claims Court ($25,000 limit)
Fast, affordable, no attorney required for amounts within the limit
File a Civil Lawsuit
For amounts above small claims limits, file in Tennessee civil court
Enforce the Judgment
Up to 25% of disposable earnings. Bank account levies and property liens also available
Statute of Limitations in Tennessee
The statute of limitations for collecting on a promissory note in Tennessee is 6 years (oral and written). After this period, the lender loses the right to file a lawsuit to enforce the note.
| Aspect | Tennessee Rule |
|---|---|
| Usury Rate | 10% (default) |
| Statute of Limitations | 6 years (oral and written) |
| Small Claims Limit | $25,000 |
| Garnishment Rules | Up to 25% of disposable earnings |
Sample Tennessee Unsecured Promissory Note
Below is a preview of our Tennessee-specific unsecured promissory note template.
STATE OF TENNESSEE
UNSECURED PROMISSORY NOTE
No Collateral Loan Agreement
LENDER:
Name: [Lender Name]
Address: [Tennessee Address]
BORROWER:
Name: [Borrower Name]
Address: [Tennessee Address]
LOAN TERMS
Principal: $[Amount]
Interest: [Rate]% per annum (max 10% (default) in TN)
This note is UNSECURED. No collateral has been pledged.
Tennessee Unsecured Promissory Note FAQ
Answers to common questions about unsecured promissory notes and collection procedures in Tennessee.
Official Tennessee Resources
Use these official resources for Tennessee lending laws and court procedures.
Other Tennessee Promissory Note Types
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