Delaware Code Title 5 Sec. 2909 – Prepayment
(a) A buyer may prepay the debt due under a retail installment contract in full at any time.
Terms Used In Delaware Code Title 5 Sec. 2909
- Annual percentage rate: The cost of credit at a yearly rate. It is calculated in a standard way, taking the average compound interest rate over the term of the loan so borrowers can compare loans. Lenders are required by law to disclose a card account's APR. Source: FDIC
- buyer: means a person who buys a motor vehicle from a retail seller and who executed a retail installment contract in connection therewith. See Delaware Code Title 5 Sec. 2901
- Contract: A legal written agreement that becomes binding when signed.
- 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. See Delaware Code Title 5 Sec. 2901
- Finance charge: The total cost of credit a customer must pay on a consumer loan, including interest. The Truth in Lending Act requires disclosure of the finance charge. Source: OCC
- Finance charge: means the amount agreed upon between the buyer and the seller, as limited by this chapter, 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. See Delaware Code Title 5 Sec. 2901
- Minimum finance charge: The minimum, or fixed, finance charge that will be imposed during a billing cycle. A minimum finance charge usually applies only when a finance charge is imposed, that is, when you carry over a balance. Source: Federal Reserve
- Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant.
- 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. See Delaware Code Title 5 Sec. 2901
(b) If the finance charge imposed pursuant to § 2908 of this title in respect of a retail installment transaction has been precomputed and taken in advance, then, in the event of prepayment of the entire indebtedness, the holder shall refund to the buyer the unearned portion of the precomputed finance charge. This refund shall be in an amount not less than the amount which would be refunded if the unearned precomputed finance charge were calculated in accordance with the actuarial method, provided that the buyer shall not be entitled to a refund which results in a net minimum finance charge of less than $25, and provided further that the holder shall not be required to refund the unearned portion of the finance charge if such amount is less than $1. The unearned portion of the precomputed finance charge is, at the option of the holder, either:
(1) That portion of the precomputed finance charge which is allocable to all originally scheduled or, if deferred, all deferred payment periods, or portions thereof, ending subsequent to the date of prepayment. The unearned precomputed finance charge is the total of that which would have been earned for each such period, or portion thereof, had the debt due under the contract not been precomputed, by applying to unpaid balances of principal, according to the actuarial method, an annual percentage rate based on the precomputed finance charge, assuming that all payments were made as scheduled, or as deferred, if deferred. The holder, at its option, may round this annual percentage rate to the nearest one-quarter of 1 percent; or
(2) The total precomputed finance charge less the earned precomputed finance charge. The earned precomputed finance charge shall be determined by applying an annual percentage rate based on the total precomputed finance charge, under the actuarial method, to the unpaid balances for the actual time those balances were unpaid up to the date of prepayment.
(c) As used in subsection (b) of this section:
(1) “Actuarial method” means the method of allocating payments made on a debt due under a retail installment contract between the outstanding balance of the indebtedness and the finance charge pursuant to which a payment is applied first to the accumulated finance charge and any remainder is subtracted from the outstanding balance of the indebtedness.
(2) “Payment period” means the time period within which periodic installment payments of the indebtedness are due under the terms of a retail installment contract.
(d) If a charge was made to buyer for premiums for insurance in respect of a retail installment transaction, then, in the event of prepayment, the holder shall refund to such buyer the excess of the charge to such buyer therefor over the premiums paid or payable to the holder, if such premiums were paid or payable by the holder periodically, or the refund for such insurance premium received or receivable by the holder, if such premium was paid or payable in a lump sum by the holder, provided that no such refund shall be required if it amounts to less than $1.
(e) In connection with any prepayment of a debt due under a retail installment contract by a buyer, the holder may not impose any prepayment charge.
63 Del. Laws, c. 2, § ?13; 70 Del. Laws, c. 6, § ?14; 71 Del. Laws, c. 19, § ?79;