Chattanooga Cracks Down on High-Interest Lending

City passes new ordinance to limit predatory lending practices

Published on Feb. 27, 2026

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The city of Chattanooga, Tennessee has passed a new ordinance aimed at cracking down on high-interest lending practices that have long plagued low-income residents. The new law will cap interest rates on short-term loans and require lenders to provide more transparent information to borrowers.

Why it matters

Predatory lending has been a persistent issue in Chattanooga, with payday loan and title loan companies often charging exorbitant interest rates that trap vulnerable residents in cycles of debt. This new ordinance is an attempt by the city to protect its most financially insecure populations and promote more equitable lending practices.

The details

The new ordinance caps interest rates on short-term loans at 36%, down from the previous average of over 400%. It also requires lenders to provide clear and upfront information to borrowers about the total cost of the loan, including all fees and interest. Lenders will also be prohibited from rolling over loans or offering new loans to cover previous ones, a common tactic used to extend debt.

  • The Chattanooga City Council passed the new ordinance on February 25, 2026.
  • The ordinance will go into effect on April 1, 2026.

The players

Chattanooga City Council

The legislative body of the city of Chattanooga, Tennessee that passed the new ordinance regulating high-interest lending.

Payday Loan Industry

The group of short-term, high-interest lenders that will be impacted by the new Chattanooga ordinance.

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What they’re saying

“This ordinance is a major victory for the financial health and stability of our community's most vulnerable residents.”

— Mayor Tim Kelly, Mayor of Chattanooga (Chattanooga Times Free Press)

“We're disappointed the city has chosen to limit consumer credit options, which will only hurt the people who need them most.”

— Spokesperson, Payday Loan Industry Association (Chattanooga Times Free Press)

What’s next

The new ordinance will be closely monitored by city officials to ensure compliance from lenders. Residents will also be educated on their rights and protections under the new law.

The takeaway

Chattanooga's crackdown on predatory lending practices is a significant step towards promoting financial equity and protecting vulnerable populations from exploitative loans. Other cities may look to this model as they seek to address similar issues in their own communities.