When you have unplanned expenses and are on a tight budget, a payday loan could be helpful. Payday loans, a type of short-term loan, give you quick access to money when you need it. Read on to find out about the laws in Delaware and everything else you should know about how payday advances work.
When you’re in need of money between paychecks, you may be considering a payday loan. While these can be good for emergencies, the high interest rates make borrowing risky. We’ll go over all the possible fees and charges, as well as the laws in Delaware, to make sure you know everything you need before you borrow.
How does a payday loan in Delaware work?
Payday loans are legal in Delaware. Delaware Code Title 5 Chapter 22 § 2227 governs payday lenders, which are required to be licesned in order to service loans.
Here are the seven basic rules surrounding payday loans in Delaware.
- Maximum loan amount: $500 per loan, $1,000 total
- Minimum loan term: None
- Maximum loan term: 60 days
- Maximum APR: None
- Rollovers: Borrowers are permitted 4 rollover/refinancing periods per loan.
- Loan limit: Borrowers are limited to 5 loans every 12 months, including refinancing and rollovers.
- Repayment plan: Repayment plans are available at the discretion of the lender.
You can cancel your payday loan before the end of the business day after you receive your funds at no extra charge.
What are the fees of payday loans in Delaware?
You can expect to pay back your loan amount with interest charges and financing fees added on. If you don’t pay it back on time or decide to get a second loan, you could be charged additional fees.
- APR: Payday lenders can charge interest at a daily, weekly, monthly or annual percentage rate, and there is no upper limit to the interest a lender can charge.
- Financing fees: A lender can charge reasonable fees for services rendered as well as for reimbursement of expenses.
- Collection fees: A lender can charge collection fees only once, limited to 5% of the payment amount. If you default, a lender can also charge reasonable attorney fees.
- Rollover fees: If your lender permits you to defer a payment, you may have to pay a deferral charge.
Worried about the high costs? Alternatives to consider
When you’re facing a financial emergency, like a major car repair or an unexpected bill, you might be struggling to make it to your next paycheck. A payday loan is meant to fill this gap, and if you budget for the total cost of the loan–outlined in your contract–you can avoid the debt trap others fall in.
As with all forms of credit, be sure you can afford the loan before you apply.
If you don’t think you’ll be able to afford it or want to avoid taking out a loan, Delaware has some programs that can help. The Delaware Prescription Assistance Program, Temporary Assistance for Needy Families (TANF) and the Food Supplement Program can all be used when you need to pay your bills but aren’t able to afford them.
Even more alternatives to consider
How can I apply for a payday loan?
In order to qualify for a loan, you’ll to meet some basic eligibility criteria: be at least 18 years old, be a US citizen or permanent resident and have a regular source of income.
You’ll also need to provide some personal information.
- Your name, date of birth, Social Security number and a valid form of ID
- Your address, email and phone number
- Details about your employment and income
- Details of your existing checking account
In addition to these, borrowers are required to submit their signature and thumb print in order to confirm their identity and prevent fraud. This applies to loans from storefronts and online.
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