Title Loans in Delaware [Everything to Know About Loans in Delaware and Laws Surrounding It]
Are you dealing with financial troubles that need URGENT attention?
One way you can address these problems is by applying for a title loan in Delaware. This means that you will be using your vehicle as collateral to secure a loan.
If this sounds interesting to you, we've compiled this guide to share everything you need to know.
After reading this, you'll have a much better idea if title loans really are the solution that you're looking for.
Delaware, known as "The First State," features a diamond and the date December 7, 1787, on its state flag.
Advantages of Car Title Loans
Is acquiring a title loan really the best way to get emergency money? Let's find out. Here are the different advantages that you can consider:
1 . Quick And Easy Approval of Cash Loans
People often apply for car title loans when they desperately and urgently need cash. This is because these types of loans are known to be evaluated and approved very quickly.
You can even get the money you need in less than a day! That's how fast it can be.
Some may say this is because credit checks aren't required at all during the application process. However, we're here to tell you that this isn't always the case.
Lenders may STILL perform a credit check once you've submitted your application. Either way, a better credit score may result in higher loan amounts or more advantageous interest rates.
2 . You Can Still Use Your Vehicle
A car title loan isn't like pawn transactions where you can only claim the item back once you're able to pay for it.
With this type of loan, you don't even have to worry about leaving your car with the lender! You'll just have to surrender the title of the vehicle and they can only repossess your car if you are unable to pay.
This is beneficial if you need a car to work or travel.
Disadvantages of Auto Title Loans
Title loans or title pawns can be great if you're short on cash. But we have to admit they also have their own drawbacks.
The following are the disadvantages you can expect once you apply for car title loans:
1 . Higher Interest Rates
Title loans are known to have higher interest rates compared to a traditional bank loan or a credit card. It can definitely help if you're in a pinch, but it's not the cheapest solution out there.
With this, make sure you extensively review the terms and conditions of your agreement before you push through with auto title loans.
2 . Must Be Repaid in a Short Period of Time
Title loans should only be availed for short-term financial needs because of the brief repayment period.
It's important you are confident in your ability to repay the loan in this short period of time. If there's a low probability that you can pay the money within the deadline, maybe a title loan isn't the best remedy for you.
3 . High Risk of Your Car Being Repossessed
If you aren't able to repay the loan as specified in your contract, you may lose your car. This may greatly affect your daily life, which is why getting a title loan is a very risky decision.
We'll say it again: you have to be EXTRA cautious when applying for title loans. Be aware there can be serious consequences if you default.
How Can I Apply for Title Loans in Delaware?
There are a lot of things you have to know and take into consideration before you can apply for title loans in Delaware.
But don't worry. We're here to sort it all out for you.
Laws On Lenders in Delaware
Delaware loans are required to come from licensed loan services. This is to ensure its rules and guidelines are regulated and monitored by the state.
Be extra careful about this and do your research before you make an agreement with anyone regarding a car title loan.
Also, Delaware lenders cannot advertise an interest rate that is different than what is practiced in actuality. Yes, this still applies in situations where the repayment deadline has been extended.
After the approval of your request, lenders are required to disclose the following statements in the loan agreement:
- The loan is used for short-term cash and should not be treated as a solution for long-term financial problems.
- The borrower is not required to complete the loan agreement just because you received these disclosures.
- Once the title loan agreement has been signed, the lender will have a security interest in your vehicle. If you are unable to fulfill the obligations as expressed by the agreement, he can possess your vehicle and sell it.
- Once the lender has possessed your vehicle, you may lose equity in it.
- You are able to rescind the loan agreement within the business day after the loan proceeds were disbursed to you. You may do this by returning the full amount of money to the lender.
- You can receive information from the Office of the State Bank Commissioner regarding credit counseling sources.
- If you have grounds to believe that your lender has violated any laws concerning the loan agreement, you may file a complaint with the Office of the State Bank Commissioner.
Required Documents and Information
In Delaware, the following are generally the documents you will need to submit for your application:
- Legal identification or photo ID
- Lien-free auto title
- Proof of residence
- Proof of income
- Character references
- Insurance documents
- Vehicle information (model, mileage, condition, etc.)
- Photos of your vehicle (both the interior and exterior)
Take note that lenders may also request additional documents.
One thing you have to remember is that the better condition your car is in, the higher the loan amount could potentially be.
Is There a Set Interest Rate?
Delaware law does not have a minimum or maximum amount for the interest rate. This is something that the borrower and the lender have the flexibility to agree upon.
What if I Can’t Make Payment on Time?
In Delaware, an extension period is also called the rollover.
The rollover period cannot extend for more than 180 days (or 6 months) from the time the loan amount was received.
What Happens if I Still Can't Pay the Money Within the Rollover Period?
Your vehicle won't be repossessed just yet. At this point, Delaware has laws that can still work to your advantage.
After the extension period, your lender will now offer you a workout agreement before they can repossess your vehicle.
This workout agreement requires a net reduction of at least 10% of the balance every month.
As the borrower, you have at least ten business days to accept the workout agreement. If this is not done, the lender will have the right to repossess your car.
So let's say you've given your approval to the workout agreement within the deadline. If you are still not able to meet the conditions of this workout agreement, the lender will be able to repossess your vehicle.
What Happens When My Car Is Repossessed?
Once your vehicle is repossessed, the lender will want to recover your debt by selling the car.
Let's look at two possible scenarios here.
Scenario One: Your debt is $3000 and the car was sold at only $1000.
In other words, the lender was only able to sell the car for less than the money that you owe.
In cases like this, you will not be asked to reimburse the remaining cash amount of $2000.
Scenario Two: Your debt is $3000 and the car was sold at $5000.
In this scenario, your lender will have to give you the excess cash of $2000.
Once the vehicle has been sold, your lender has to provide a written explanation regarding the sale.
This includes the following information or statements:
- The sale price and whether or not this is lower or higher than the outstanding debt
- That your debt has already been paid by the money gotten from the sale
Delaware law states that this written explanation has to be given within 30 days of the sale.
Summarized Steps for Your Auto Title Loan Application
Here is a short guide for your reference as you apply for a title loan in Delaware:
- Decide on a licensed Delaware loan lender
- Fill out the inquiry form
- Present the required documents to your lender
- Read through the contract and make sure it satisfies Delaware law and suits your personal needs
- Pick up the cash loan
Frequently Asked Questions on Title Loans In Delaware
What Factors Are Considered in Determining the Final Loan Amount?
The amount of money you are able to receive is determined by the following:
- The lender that you choose
- Value of your vehicle
- Ability to repay (may be evaluated through credit checks)
What Does a Lien-Free Car Title Mean?
A lien-free car title means you own your vehicle outright. It has been paid off completely and there are no outstanding loans held against it. This is also referred to as a free and clear title.
Is It Possible to Get a Title Loan if the Vehicle Title Is Not in My Name?
No, you are unable to secure a title loan if the vehicle title is not in your own name. To remedy this, you can have the title transferred to your name.
Do I Need to Have a Job to Apply for Title Loans?
No, you do not need to have a job to apply for car title loans in Delaware.
Instead, lenders will be looking for proof of income. This can come in the form of social security payments, income from self-employment, and others.
Will I Be Required to Share My Bank Account Information to Process a Title Loan?
You are not required to share your bank account to receive the proceeds or pay for the loans.
You can ask your preferred lender which type of payment method is most suitable for you. Here are a few common ones:
- Credit/debit card
- Wire transfer
- In-person payment
How Can I Determine the Value of My Vehicle?
The value of your vehicle is determined by many factors such as:
- The current condition of the interior and exterior of the vehicle
- Current mileage
- Previous accidents that have occurred using the vehicle
Can I Have Two Title Loans on One Vehicle?
No, you can only have one title loan per vehicle.
So if you wish to have multiple title loans, you can apply under the title of different vehicles instead.
Will Title Loans Hurt My Credit Score?
Typically, title loans won't affect your credit scores. This is because lenders do not usually report these loans to any credit agencies or bureaus.
However, it's still best to confirm this information with your lender. Furthermore, if you don't pay on time, this can also decrease your credit score.
Final Words on Title Loans In Delaware
Before we end this article, here are the last few reminders to make sure that you're all set:
You have to verify that your agreement strictly follows the laws of Delaware. Review the different rules regarding interest rates, repayment deadlines, rollover periods, workout agreements, and other terms and conditions.
You must also see to it you are able to submit all the required documents and information and that you are of legal age.
A find word of warning: be extra cautious about entering this type of loan due to the high risk involved.
But overall, title loans may be the right solution for you if you are able to repay the agreed amount of money on time. With all of these points, we hope you can get your financial situation sorted out as soon as possible!