A Brief Look at Pay Day Loan Rules in Delaware

Payday loans are consumer loans that are known by different names: cash advance loans, deferred deposit loans, post-dated check loans, and check advance loans. Regardless of the name given, these loans are short term, unsecured loans that prove to be invaluable for borrowers to cover temporary cash shortfall until the next pay day.

Short term cash loans are a convenient alternative to credit cards in the sense that it will not tarnish credit ratings. They can also avoid paying hefty penalties that is incurred on late payments of the credit card amount. These loans are also less expensive than traditional short term loans includes overdrafts that are offered by certain banks.

Payday loan rules in the state of Delaware (DE) are specified in Delaware Code Title 5 Chapter 22 §978, §2227 et seq., and §2744. The state rules allow lenders to charge interest on the payday loan at an annual, monthly, weekly, daily, or other periodic percentage rates as mentioned in the loan agreement. In addition, the state allows lenders to calculate interest on simple, compound, or any other methods.

All US federal laws regarding loans such as Federal Truth federal Truth in Lending Act and others are applicable for payday loans. In addition, these loans are also governed by various state laws that outline structure and impose limitations on the pay day loans. Here will provide a brief overview of the legislations regarding pay day loans in the state of Delaware (DE).

Specific Provisions Regarding Payday Loans

The state rules in Delaware allow lenders to extend a maximum of $1,000 loan to the borrower. Lenders can extend a loan with a maximum loan term of 60 days (2 months). There are no fees and finance charges on the loan.

Apart from the inherent restrictions of payday loans, some additional restrictions are imposed on the lenders according to legislation. Lenders who provide deferred loans to consumers in the state are not allowed to roll over the loan amount after 12 weeks after the date on which loan agreement is entered with the borrower. The state legislations also do not allow lenders to charge additional interest on the deferred loan having an outstanding balance 10 weeks after the loan agreement date.


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Payday loan lenders are also not allowed to initiate any criminal proceedings against any borrower in the state of Delaware in case of a default.

State legislations require borrowers to repay the existing payday loan before they can apply for additional loans. Borrowers are allowed to rollover their loans for a maximum of four times in case they are unable to repay the loans. Moreover, they can borrow for up to five times in any calendar year.

Borrowers are encouraged to report any violation of the state payday loans legislation to the Office of State Bank Commissioner (OSBC). They can call toll (302) 739-4235 or (302) 577-6722, or send the complaint to 555 East Loockerman Street Dover, DE  19901.