Delaware General Assembly



Be it enacted by the General Assembly of the State of Delaware:

Section 1. Title 5, Delaware Code, is amended by adding a new chapter thereto as follows:


§ 2901. Definition of Terms

As used in this chapter, unless the context or subject matter otherwise requires:

(c) "Motor Vehicle" means any device propelled or drawn by any power other than muscular power, in, upon, or by which any person or property is, or may be transported or drawn upon a highway.

(d) "Retail Buyer" or "Buyer" means a person who buys a motor vehicle from a retail seller and who executed a retail installment contract in connection therewith.

(e) "Retail Seller" or "Seller" means a person who sells a motor vehicle to a retail buyer under or subject to a retail installment contract.

(f) "Retail Installment Transaction" means any transaction evidenced by a retail installment contract entered into between a retail buyer and a retail seller wherein the retail buyer buys a motor vehicle from the retail seller at a time price payable in one or more deferred installments. The cash sale price of the motor vehicle, the amount included for insurance and other benefits if a separate charge is made therefor, official fees and the finance charge shall together constitute the time price.

(e) "Retail Installment Contract" or "Contract" means an agreement, entered into in this State, pursuant to which the title to, the property in or a lien upon the motor vehicle, which is the subject matter of a retail installment transaction, is retained or taken by a retail seller from a retail buyer as security, in whole or in part, for the buyer's obligation. The term includes a chattel mortgage, a conditional sales contract and a contract for the bailment or leasing of a motor vehicle by which the bailee or lessee contracts to pay as compensation for its use a sum substantially equivalent to or in excess of its value and by which it is agreed that the bailee or lessee is bound to become, or has the option of becoming, the owner of the motor vehicle upon full compliance with the provisions of the contract.

(f) "Cash Sale Price" means the price stated in a retail installment contract for which the seller would have sold to the buyer, and the buyer would have bought from the seller, the motor vehicle which is the subject matter of the retail installment contract, if such sale has been a sale for cash instead of a retail installment transaction. The cash sale price may include any taxes, registration, certificate of title, license and other fees and charges for accessories and their installation and for delivery, servicing, repairing, or improving the motor vehicle.

(g) "Official Fees" mean the fees prescribed by law for filing, recording or otherwise perfecting and releasing or satisfying a retained title or a lien created by a retail installment contract.

(h) "Finance Charge" means the amount agreed upon between the buyer and the seller, as limited herein, to be added to the aggregate of the cash sale price, the amount, if any, included for insurance and other benefits and official fees, in determining the time price.

(i) "Sales Finance Company" means a person engaged, in whole or in part, in the business of purchasing retail installment contracts from one or more retail sellers. The term includes but is not limited to a bank, trust company, private banker, industrial bank or investment company, if so engaged. The term also includes a retail seller engaged, in whole or in part, in the business of creating and holding retail installment contracts. The term does not include the pledge of an aggregate number of such contracts to secure a bona fide loan thereon.

(j) The "holder" of a retail installment contract means the retail seller of the motor vehicle under or subject to the contract or, if the contract is purchased by a sales finance company or other assignee, the sales finance company or other assignee.

(k) "Person" means an individual, partnership, corporation, association, and any other group however organized.

(1) "Commissioner" means State Bank Commissioner.

(m) Words in the singular include the plural and vice versa.

§ 2902. Licensing of Sales Finance Companies Required

(a) No person shall engage in the business of a sales finance company in this State without a license therefor as provided in this chapter; provided, however, that no state bank or trust company, or any national bank, authorized to do business in this State shall be required to obtain a license under this chapter but shall comply with all of the other provisions of this chapter.

(b) The application for such license shall be in writing, under oath, and in the form prescribed by the Commissioner. The application shall contain the name of the applicant; date of incorporation, if incorporated; the address where the business is or is to be conducted and similar information as to any branch office of the applicant; the name and resident address of the owner or partners or, if a corporation or association, of the directors, trustees and principal officers, and such other pertinent information as the Commissioner may require.

(c) The license fee for each calendar year or part thereof shall be the sum of one hundred dollars ($100.00) for the principal place of business of the licensee and the sum of twenty-five dollars ($25.00) for each branch of the licensee maintained in this State.

(d) Each license shall specify the location of the office or branch and must be conspicuously displayed there. In case such location be changed, the Commissioner shall endorse the change of location on the license without charge.

(e) Upon the filing of such application, and the payment of said fee, the Commissioner shall issue a license to the applicant to engage in the business of sales finance company under and in accordance with the provisions of this chapter for a period which shall expire the last day of December next following the date of its issuance. Such license shall not be transferable or assignable. No licensee shall transact any business provided for by this chapter under any other name.

(f) For just cause the Commissioner may refuse to issue a license or renewal thereof. Any person aggrieved by the Commissioner's refusal to issue a license may apply for a review thereof in the same manner as under the provisions of Section 2903 (d) of this title.

§ 2903. Suspension or Revocation of Licenses

(a) A license may be suspended or revoked by the Commissioner on the following grounds:

(1) Material misstatement in application for license;

(2) Willful failure to comply with provision of this chapter relating to retail installment contracts;

(3) Defrauding any retail buyer to the buyer's damage;

(4) Fraudulent misrepresentation, circumvention or concealment by the licensee through whatever subterfuge or device of any of the material particulars or the nature thereof required to be stated or furnished to the retail buyer under this chapter.

(b) If a licensee is a firm, association or corporation, it shall be sufficient cause for the suspension or revocation of a license that any officer, director or trustee of a licensed firm, association or corporation, or any member of a licensed partnership, has so acted or failed to act as would be the cause for suspending or revoking a license to such party as an individual. Each licensee shall be responsible for the acts of any or all of his employees while acting as his agent, if such licensee after actual knowledge of said acts retains the benefits, proceeds, profits or advantages accruing from said acts or otherwise ratifies said acts.

(c) No license shall be suspended or revoked except after hearing thereon. The Commissioner shall give the licensee, at least ten days written notice, in the form of an order to show cause, of the time and place of such hearing by registered mail addressed to the principal place of business in this State of such licensee. The said notice shall contain the grounds of complaint against the licensee. Any order suspending or revoking such license shall recite the grounds upon which the same is based. The order shall be entered upon the records of the Commissioner and shall not be effective until after thirty days written notice thereof given after such entry forwarded by registered mail, to the licensee at such principal place of business. No revocation, suspension or surrender of any license shall impair or affect the obligation of any lawful retail installment contract acquired previously thereto by the licensee.

(d) Within thirty days after any such suspension or revocation, of a license the person aggrieved may apply for a review thereof by an application to the Superior Court in accordance with the practice of said court. The Superior Court shall determine de novo all questions, both of fact and of law, touching upon the legality and reasonableness of the determination of the Commissioner, and shall render such judgment as shall be lawful and just.

§ 2904. Filing of Complaints

Any retail buyer having reason to believe that this Chapter relating to his retail installment contract has been violated may file with the Commissioner a written complaint setting forth the details of such alleged violation and the Commissioner, upon receipt of such complaint, may inspect the pertinent books, records, letters and contracts of the licensee and of the retail seller involved, relating to such specific written complaint.

§ 2905. Powers of Commissioner

(a) For the purpose of administering the provisions of this Chapter, determining whether any business contemplated by this Chapter is being operated in accordance with the provisions of this Chapter, or making investigation of any complaint or alleged violation, the Commissioner and his duly authorized representatives shall have power to investigate, at any time, the business and affairs and examine the books, accounts, contracts, papers, records, documents and files of every licensee and of every person who shall be engaged in business contemplated by this Chapter, whether such person shall act, or claim to act, as principal or agent or under or without the authority of this Chapter. For this purpose the Commissioner, or his duly authorized representatives, shall have free access to the offices and places of business, books, accounts, contracts, papers, records, documents and files of all such persons.

(b) The Commissioner shall have power to issue subpoenas to compel the attendance of witnesses and the production of books, accounts, contracts, papers, records, documents and other evidence before him in any matter over which he has jurisdiction, control or supervision pertaining to this Chapter. The Commissioner shall have the power to administer oaths and affirmations to any persons whose testimony is required.

(c) If any person shall refuse to obey any such subpoena, or to give testimony, or to produce evidence as required thereby, any judge of the Superior Court may, upon application and proof of such refusal, make an order awarding process of subpoena, or subpoena duces tecum, out of the Superior Court, for such witness to appear before the Commissioner and to give testimony and to produce evidence as required thereby. Upon filing such order in the office of the clerk of the Superior Court, the clerk shall issue process of subpoena, as directed, under the seal of said court, requiring the person to whom it is directed, to appear at the time and place therein designated.

(d) If any person served with any such subpoena shall refuse to obey the same, and to give testimony, and to produce evidence as required thereby, the Commissioner may apply to any judge of the Superior Court for an attachment against such person, as for a contempt. The judge, upon satisfactory proof of such refusal, shall issue an attachment directed to any sheriff, constable or police officer, for the arrest of such person, and upon his being brought before such judge, proceed to a hearing of the case. The judge shall have power to enforce obedience to such subpoena, and the answering of any question, and the production of any evidence, that may be proper, by a fine not exceeding one hundred dollars ($100.00), or by imprisonment for not more than thirty days, or by both fine and imprisonment, and to compel such witness to pay the costs of such proceeding as taxed by the court.

(e) The Commissioner may make such rules and regulations, and such specific rulings, demands and findings as he deems necessary for the enforcement of this Chapter and the proper conduct of the business authorized and required to be licensed thereunder. Such rules and regulations, specific rulings, demands and findings shall be in addition to, and not inconsistent with, the provisions of this Chapter.

§ 2906. Requirements and Prohibitions as to Retail Installment Contracts

(a) (1) A retail installment contract shall be in writing, shall be signed by both the buyer and the seller and shall be completed as to all essential provisions prior to the signing of the contract by the buyer.

(2) The printed portion of the contract, other than instructions for completion, shall be in at least eight point type. The contract shall contain in a size equal to at least ten point bold type.

(i) A specific statement that liability insurance coverage for bodily injury and property damage caused to others is not included, if that is the case; and

() The following notice: "Notice to the Buyer: 1. Do not sign this contract before you read it or if it contains any blank spaces. 2. You are entitled to an exact copy of the contract you sign."

(3) The seller shall deliver to the buyer, or mail to him at his address shown on the contract, a copy of the contract signed by the seller. Until the seller does so, a buyer who has not received delivery of the motor vehicle shall have the right to rescind his agreement and to receive a refund of all payments made and return of all goods traded-in to the seller on account of or in contemplation of the contract, or if such goods cannot be returned, the value thereof. Any acknowledgment by the buyer of delivery of a copy of the contract shall be in a size equal to at least ten point bold type and, if contained in the contract, shall appear directly above the buyer's signature.

(4) The contract shall contain the names of the seller and the buyer, the place of business of the seller as specified by the buyer and a description of the motor vehicle including its make, year model, model and identification numbers or marks.

(b) The contract shall contain the following items:

(1) The cash sale price of the motor vehicle;

(2) The amount of the buyer's down payment, and whether made in money or goods, or partly in money and partly in goods;

(3) The difference between items one and two;

(4) The amount, if any, included for insurance and other benefits, specifying the types of coverage and benefits;

(5) The amount of official fees;

(6) The principal balance, which is the sum of item three, item four, and item five;

(7) The amount of the finance charge;

(8) The time balance, which is the sum of items six and seven, payable in installments by the buyer to the seller, the number of installments, the amount of each installment and the due date or period thereof.

The above items need not be stated in the sequence or order set forth; additional items may be included to explain the calculations involved in determining the stated time balance to be paid by the buyer.

(c) The amount, if any, included for insurance, which may be purchased by the holder of the retail installment contract, shall not exceed the applicable premiums chargeable in accordance with the rates filed with the Insurance Commissioner of the State of Delaware. If dual interest insurance on the motor vehicle is purchased by the holder it shall, within thirty days after execution of the retail installment contract, send or cause to be sent to the buyer a policy or policies or certificate of insurance, written by an insurance company authorized to do business in this state, clearly setting forth the amount of the premium, the kind or kinds of insurance, the coverages and all the terms, exceptions, limitations, restrictions and conditions of the contract or contracts of insurance. The buyer shall have the privilege of purchasing such insurance from an agent or broker of his own selection and of selecting an insurance company acceptable to the holder, but in such case the inclusion of the insurance premium in the retail installment contract shall be optional with the seller.

(d) If any insurance is cancelled, unearned insurance premium refunds received by the holder shall be credited to the final maturing installments of the contract except to the extent applied toward payment for similar insurance protecting the interests of the buyer and the holder or either of them.

(e) The holder may, if the contract so provides, collect a delinquency and collection charge on each installment in default for a period not less than ten days in an amount not in excess of five per cent of each installment or five dollars, whichever is less. In addition to such delinquency and collection charge, the contract may provide for the payment of attorneys' fees not exceeding fifteen per cent of the amount due and payable under such contract when such contract is referred for collection to an attorney not a salaried employee of the holder of the contract plus the court costs.

(f) No retail installment contract shall be signed by any party thereto when it contains blank spaces to be filled in after it has been signed except that, if delivery of the motor vehicle is not made at the time of the execution of the contract, the identifying numbers or marks of the motor vehicle or similar information and the due date of the first installment may be inserted in the contract after its execution. The buyer's written acknowledgment, conforming to the requirements of Section 2906 (a) (3) of this title, of delivery of a copy of a contract shall be conclusive proof of such delivery, that the contract when signed did not contain any blank spaces except as herein provided, and of compliance with Section 2906 of this title in any action or proceeding by or against the holder of the contract.

(g) Upon written request from the buyer, the holder of a retail installment contract shall give or forward to the buyer a written statement of the dates and amounts of payments and the total amount unpaid under such contract. A buyer shall be given a written receipt for any payment when made in cash.

(h) No provision in a retail installment contract relieving the seller from liability for any legal remedies which the buyer may have against the seller under the contract, or in any separate instrument executed in connection therewith, whether before or at the time of the making of the contract, shall be enforceable.

§ 2907. Finance Charge Limitation

(a) Notwithstanding the provisions of any other law, the finance charge shall not exceed the following rates:

Class 1. Any new motor vehicle designated by the manufacturer by a year model not earlier than the year in which the sale is made--$7 per $100 per year.

Class 2. Any new motor vehicle not in Class 1 and any used motor vehicle designated by the manufacturer by a year model of the same or not more than two years prior to the year in which the sale is made--$10 per $100 per year.

Class 3. Any used motor vehicle not in Class 2 and designated by the manufacturer by a year model more than two years prior to the year in which the sale is made--$13 per $100 per year.

(b) Such finance charge shall be computed on the principal balance as determined under Section 2906 (b) of this title on the contracts payable in successive monthly payments substantially equal in amount. Such finance charge may be computed on the basis of a full month for any fractional month period in excess of ten days. A minimum finance charge of twenty-five dollars ($25.00) may be charged on any retail installment transaction.

(c) When a retail installment contract provides for unequal or irregular installment payments, the finance charge may be at the effective rates permitted in subsection (a) hereof, having due regard for the schedule of payments.

(d) Any sales finance company may purchase or acquire or agree to purchase or acquire from any seller any contract on such terms and conditions as may be agreed upon between them. Filing of the assignment, notice to the buyer of the assignment, and any requirement that the holder maintain dominion over the payments or the motor vehicle if repossessed shall not be necessary to the validity of a written assignment of a contract as against creditors, subsequent purchasers, pledgees, mortgagees and lien claimants of the seller. Unless the buyer has notice of the assignment of his contract, payment thereunder made by the buyer to the last known holder of such contract shall be binding upon all subsequent holders.

§ 2908. Credit Upon Anticipation of Payments

Notwithstanding the provisions of any retail installment contract to the contrary, any buyer may pay in full at any time before maturity the debt due under any retail installment contract and in so paying such debt shall receive a refund credit thereon for such anticipation of payments. The amount of such refund shall represent at least as great a proportion of the finance charge as the sum of the monthly time balances after the month in which prepayment is made, bears to the sum of all the monthly time balances under the schedule of payments in the contract, provided, however, that the holder shall not be required to rebate any portion of such unearned finance charge which results is a net minimum finance charge on the contract less than $25.00; and, provided further that the holder shall not be required to rebate any unearned finance charge on the amount due computed as herein set forth, if less than $1.00.

§ 2909. Refinancing Retail Installment Contract

If the holder of a contract, at the request of the buyer, extends the scheduled due date of all or any part of any installment or installments, the holder may re-state the amount of the installments and the time schedule therefor, and collect for such extension not more than five dollars ($5.00) in addition to one per cent (1%) per month simple interest on the respective descending balances computed on the amount and for the period of such extension or renewal.

§ 2910. Penalties

(a) Any person who shall willfully and intentionally violate any of the provisions of this chapter or engage in the business of a sales finance company in this state without a license therefor as provided in this chapter shall be guilty of a misdemeanor and upon conviction shall be punished by a fine not exceeding five hundred dollars ($500.00).

(b) A willful violation of Sections 2906 or 2907 of this title by the seller or holder shall bar recovery of any finance charge, delinquency or collection charge on the contract.

§ 2911. Waiver


All other laws or parts of laws now in effect inconsistent with the provisions of this Act are hereby repealed, superseded, modified, or amended so far as necessary to conform to and give full force and effect to the provisions of this Act.


If any provision of this Act or the application thereof to any person or circumstances is held unconstitutional, the remainder of the Act and the application of such provision to other persons or circumstances shall not be affected thereby.

Section 4. SHORT TITLE

This Act may be cited as "The Motor Vehicle Sales Finance Act".


This Act shall take effect June 1, 1959 or if this Act becomes law after that date then this Act shall take effect ninety days after it is approved by the Governor of the State of Delaware.

Approved July 9, 1960.