Borrowing in Delaware: What State Law Allows

Payday loans: no rate cap, but a limit on how many

Delaware calls payday loans short-term consumer loans: $1,000 or less, with a repayment period of under 60 days, made by a lender licensed by the Office of the State Bank Commissioner. The price is whatever the contract says. Section 2229 of Title 5 lets a licensed lender charge the periodic rate set in the loan agreement, with no ceiling. That makes the APR on your disclosure the number to read first.

What the law does limit:

• Five loans in 12 months. No lender may give you a loan that would mean more than five short-term loans from all licensed lenders in any 12-month period. Rollovers and refinancings count.
• Four rollovers. A lender can't roll an existing loan over more than four times.
• A free way out. You can cancel by returning the full amount by the close of the next business day, with no fee.
• A shared database. Lenders check a statewide real-time database to see whether you are still eligible.

The law also describes a workout agreement: a repayment plan in equal installments over at least 90 days. If you can't repay on the due date, ask for one in writing before you agree to another rollover, and compare the alternatives to payday loans.

Title loans: 180 days, then a workout

A Delaware title loan is secured by your car's title, isn't used to buy that car, and must have an original repayment period of 180 days or less. Rollovers can't stretch it past 180 days from the day you got the money. As with payday loans, the statute sets no cap on the starting rate. A lower introductory rate can't rise on a rollover, and once the loan and any workout end, interest drops to the state's legal rate. Interest stops when the lender takes the car.

• Before repossessing or suing, the lender must offer a workout agreement. Each payment must cut the unpaid balance by at least 10% a month, and you get at least 10 business days to accept.
• If the car is sold, the sale settles the debt: you owe no deficiency, any surplus goes to you, and the lender must explain the sale in writing within 30 days.
• You can cancel for any reason until the end of the next business day by returning the money.

Other licensed loans follow the contract rate

The same rule applies to installment loans from Delaware-licensed lenders: the rate is what you agree to. There is no tiered ceiling like many states have, so two offers for the same amount can differ by hundreds of dollars. Compare the APR and total cost of each offer, and use the APR calculator when a lender quotes fees separately.

For comparison, federal credit unions are held to an 18% APR ceiling on most loans through September 10, 2027, and a personal loan from a bank or credit union is often far cheaper than a short-term loan if your credit allows it.

If you fall behind: three years, in most cases

Credit card debt usually falls under the three-year rule for actions based on a promise. A creditor suing on a signed promissory note may have six years. If you get a letter about an old debt, read how statutes of limitations work before you pay or sign anything.

Delaware exempts 85% of your wages from attachment, so a judgment creditor can take at most 15%. Only one wage attachment can run at a time, and fines, court costs and state taxes are excepted. The federal limit also applies, so lower earners may keep more. For your rights when collectors call, see debt collectors and your rights.

Checking a lender and filing a complaint

1. 1 Confirm the license. The Office of the State Bank Commissioner publishes a list of licensed lenders that it updates weekly; NMLS Consumer Access is another check.
2. 2 Get the cost in writing: amount financed, finance charge in dollars, APR and every due date.
3. 3 Use the cancel window if you change your mind: return the money by the end of the next business day.
4. 4 Complain to the State Bank Commissioner if a lender misleads you or ignores these rules. You can also file with the CFPB.

Common questions