Tennessee Title Pledge Lender Bond: A Comprehensive Guide
This guide provides information for insurance agents to help their customers obtain a Tennessee Title Pledge Lender bond.
At a Glance:
- Lowest Cost: $100 per year or $10 a month
- Bond Amount: Determined on a case-by-case basis (more on this later)
- Who Needs It: All title pledge lenders operating in Tennessee
- Purpose: To protect the public from financial harm if the title pledge lender commits fraud or engages in unfair business practices
- Who Regulates Title Pledge Lenders in Tennessee: The Tennessee Department of Financial Institutions
Background
Tennessee Code Annotated 45-15-105 requires all title pledge lenders operating in the state to obtain a license from the Department of Financial Institutions. The Tennessee Legislature enacted the licensing requirement to ensure that title pledge lenders do not engage in unethical business practices. To provide financial security for the enforcement of the licensing law, title pledge lenders must purchase and maintain a surety bond to be eligible for licensure.
What Is the Purpose of the Tennessee Title Pledge Lender Bond?
Tennessee requires all title pledge lenders to purchase a surety bond as part of the application process to obtain a license. The bond ensures that restitution is available to any damaged party should the title pledge lender fail to abide by the regulations outlined in the Tennessee Code Annotated Title 45 Chapter 15. Specifically, the bond protects claimants if the title pledge lender commits fraud or engages in unfair business practices. In short, the bond is a type of insurance that protects the public if the title pledge lender violates the terms of their license.
How Can an Insurance Agent Obtain a Tennessee Title Pledge Lender Bond?
BondExchange makes obtaining a Tennessee Title Pledge Lender bond easy. Simply log in to your account and use our keyword search to find the “title pledge lender” bond in our database. Don’t have a login? Enroll now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email, or chat from 7:30 AM to 7:00 PM EST to assist you.
At BondExchange, our 40 years of experience, leading technology, and access to markets ensures that we have the knowledge and resources to provide your clients with fast and friendly service whether obtaining quotes or issuing bonds.
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How Is the Bond Amount Determined?
According to Tennessee Code Annotated 45-14-106, the Title Pledge Lender bond must be equal to $25,000 for each business location under the licensee’s jurisdiction. However, the surety bond shall not be in an amount greater than $200,000.
Is a Credit Check Required for the Tennessee Title Pledge Lender Bond?
Surety companies will run a credit check on the title pledge lender to determine eligibility and pricing for the Tennessee Title Pledge Lender bond. Title pledge lenders with excellent credit and work experience can expect to receive the best rates. While title pledge lenders with poor credit may be declined by some surety companies or have to pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the applicant’s credit.
How Much Does the Tennessee Title Pledge Lender Bond Cost?
The Tennessee Title Pledge Lender bond can cost between $100 to $1,500 per year or $10 to $150 per month. Insurance companies determine the rate based on several factors including your customer’s credit score and experience. The chart below briefly references the approximate bond cost on the $25,000 bond requirement.
$25,000 Tennessee Title Pledge Lender Bond Cost
| Credit Score* | Bond Cost (1 Year) | Bond Cost (1 month) |
|---|---|---|
| 720+ | $100 | $10 |
| 680 – 719 | $113 | $12 |
| 660 – 679 | $175 | $18 |
| 649 – 659 | $250 | $25 |
| 629 – 648 | $375 | $38 |
| 600 – 628 | $625 | $63 |
| 580 – 599 | $875 | $88 |
| 550 – 579 | $1,000 | $100 |
| 525 – 549 | $1,250 | $125 |
| 500 – 525 | $1,500 | $150 |
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
How Does Tennessee Define “Title Pledge Lender”?
To paraphrase Tennessee Code Annotated 45-15-103, a title pledge lender is a business that makes title loans. Title loans are generally short-term, high-interest loans that use a borrower’s titled personal property as collateral.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How Do Title Pledge Lenders Become Licensed in Tennessee?
Title pledge lenders in Tennessee must navigate several steps to obtain a license. Below are the general guidelines, but applicants should refer to the Department’s Title Pledge Lenders webpage for details on the process.
License Period – The license period for Tennessee title pledge lenders is January 1st to December 31st.
Step 1 – Purchase a Surety Bond
Title pledge lenders operating within the State of Tennessee are required to purchase and maintain a surety bond.
Step 2 – Complete License Application
Applications for a title pledge lender license must be completed through the National Multistate Licensing System & Registry (NMLS). The application must include various financial statements, a business plan, and a $500 initial license fee. All requirements can be found in the TN Title Pledge Lender License Application Checklist.
How Do Title Pledge Lenders in Tennessee Renew Their Licenses?
Title pledge lenders can renew their licenses online through the NMLS website. License renewal applications are due by December 1st of each year and are subject to a renewal fee.
What Are the Insurance Requirements for Title Pledge Lenders in Tennessee?
Tennessee does not require title pledge lenders to purchase any form of liability insurance as a prerequisite to obtaining a license. Title pledge lenders must purchase and maintain a surety bond.
How Do Tennessee Title Pledge Lenders File Their Bonds?
Title pledge lenders should submit their completed bond forms, including the power of attorney, electronically through the NMLS. The surety bond requires signatures from the surety company, as well as a representative from the title pledge lender business. The surety company should include the following information on the bond form:
- Bond number
- The legal name of the individual buying the bond
- Surety company’s name
- Date the bond is signed
What Can Tennessee Title Pledge Lenders Do to Avoid a Claim Against Their Surety Bond?
To avoid claims against their bonds, title pledge lenders in Mississippi must follow all license regulations in the state, including some of the most important issues below that tend to cause claims:
- Misrepresentation
- Unethical business practices
- Fraud
What Other Insurance Products Can Agents Offer Title Pledge Lenders in Tennessee?
Most reputable title pledge lenders will purchase business liability insurance. Bonds are our only business at BondExchange, so we do not issue any other types of insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Tennessee Title Pledge Lender Customers?
Tennessee conveniently provides a public database to search for active title pledge lenders in the state. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.
