Title 5 Banking
2900 Financing the Sale of Motor Vehicles
2902 Motor Vehicle Sales Finance Companies Operating Regulations
5 Del.C. §2906(e)
Formerly Regulation No.: 5.2906(e).0002
Effective Date: November 12, 1999
1.0 Application of Chapter
1.1 Lease Contracts
1.1.1 A lease contract is governed by Chapter 29 of Title 5 of the Delaware Code, when all of the following exist:
1.1.1.1 The lessee contracts to pay a sum substantially equivalent or in excess of the value of the motor vehicle for the use of the motor vehicle over the lease term.
1.1.1.2 The lessee is bound to become, or has the option of becoming, the owner of the motor vehicle at some time during, or at the expiration of, the lease contract.
1.1.1.3 The value for which the motor vehicle is to be sold at the end of the lease term is not payable in a single installment (Cash Sale).
1.1.2 A lease contract is not governed by Chapter 29 of Title 5 of the Delaware Code, when any one of the contract provisions described in 1.1.1, 1.1.1.1, 1.1.1.2, and 1.1.1.3 is absent.
1.2 For the purposes of Chapter 29 of Title 5 of the Delaware Code, all ‘motor vehicles’ which meet the definition contained in 5 Del.C. §2901(1), regardless of whether the intended use is commercial or personal, fall under the auspices of this chapter.
1.3 If a trade-in is involved in a credit sale transaction and the amount of the existing lien exceeds the value of the trade-in, inclusion of the negative equity financing is permissible under Chapter 29, Title 5 of the Delaware Code. In a negative equity trade-in transaction where no cash payment is involved licensees must disclose a zero down payment and under no circumstances should the negative equity be disclosed as a negative number as the consumer’s down payment. Any negative equity to be financed under the retail installment sale contract should be disclosed under the provisions of §2907(e)(4) and not §2907(e)(2) of Title 5 of the Delaware Code.
2.0 Maintenance of Operating Regulations for Motor Vehicle Sales Finance Companies
2.1 All licensees shall conduct business in compliance with Chapter 29 of Title 5 of the Delaware Code, and any regulations issued thereunder. Each office licensed under Chapter 29 of Title 5 of the Delaware Code shall possess copies of all applicable regulations. These regulations include:
2.1.1 Regulation 2901 (formerly 5.2906(e)/122(b).0001) - Motor Vehicle Sales Finance Companies Minimum Requirements for Content of Books and Records;
2.1.2 Regulation 2902 (formerly 5.2906(e).0002) - Motor Vehicle Sales Finance Companies Operating Regulations;
2.1.3 Regulation 2903 (formerly 5.2906(e).0003) - Report of Delaware Loan Volume Motor Vehicle Installment Contracts;
2.1.4 Regulation 2904 (formerly 5.2111/2210/2906.0006) - Report of Delaware Assets; and
2.1.5 Regulation 101 (formerly 5.141.0001.NC) - Retention of Financial Institution Records.
2.2 The manager and staff of each office shall familiarize themselves with said regulations. Loss or misplacement of regulations shall be made known to the Office of the State Bank Commissioner and replacements will be furnished. Failure to maintain the aforementioned regulations shall constitute a violation of both 5 Del.C. §2906(e) and this regulation.
3.0 Examination and Supervisory Assessment Fees
3.1 Motor Vehicle Sales Finance Companies licensees shall be subject to examination pursuant to §122 of Title 5 of the Delaware Code. The cost of such examinations shall be assessed to the licensee in accordance with 5 Del.C. §127(a). A licensee shall remit payment not later than 30 days after the date of the invoice for the fees for the examination. In addition, the Commissioner shall assess annually each licensee a supervisory assessment fee, due and payable on August 1 of each year, as provided in 5 Del.C. §127(b). Failure of a licensee to remit timely payment of the examination fee or supervisory assessment will result in a penalty of 0.05 percent for each day that the examination fee or supervisory assessment shall remain unpaid after the due date, as provided in §127(a) and §127(b) of Title 5 of the Delaware Code.
4.0 Security Interest
4.1 A licensee shall take the necessary action(s), to release or satisfy a retained title or a lien created by a retail installment contract, within thirty days of the date the debt secured by the motor vehicle is satisfied or performed.
5.0 Credit Life, Health, and Accident Insurance
5.1 A licensee may request, but not require, an individual borrower to be insured under a life, health, accident, health and accident, or other credit or other permissible insurance policy, whether group or individual.
5.2 Any lender may offer credit life and health insurance to qualified borrowers. Such insurance transactions shall conform to all statutes of the Insurance Code of the State of Delaware, as well as rules and regulations of the Insurance Commissioner, as may from time to time be prescribed.
5.3 Every lender offering credit life and health insurance, whose charges do not conform to those authorized in the Insurance Commissioner’s Regulation No. 2501 (formerly regulation 5), shall maintain in each office a copy of a letter filed with the Insurance Commissioner requesting the deviated rate, as well as approval by the Insurance Commissioner of the rate.
5.4 Credit life insurance refunds shall be calculated as of the date of death.
5.5 Credit health insurance payments received by the lender shall be applied to the account for the period the payment actually covers, regardless of the date of receipt. Additional interest charges shall not accrue should payment be received after the payment due date.
5.6 The Office of the State Bank Commissioner shall provide a copy of the Insurance Commissioner’s Regulation No. 2501 (formerly regulation 5), and any subsequent applicable regulations promulgated, to each licensee.
6.0 Other Insurance
6.1 Any licensee may require a proof of insurance coverage for any loan secured by a motor vehicle.
6.2 A licensee may offer, but not require, such other insurance products as the State Bank Commissioner may, upon written approval, permit. No such insurance may be offered, after January 1, 1992, without the State Bank Commissioner’s written approval. Those insurances offered prior to January 1, 1992 shall not require written approval, provided such insurances were reported to the State Bank Commissioner before February 10, 1993.
7.0 Borrower-Signed Authorization for Insurance
7.1 Any insurance authorized by these Rules and Regulations must be supported by a specific request signed by the borrower. This request shall be attached to, or made a part of, the application documents.
3 DE Reg. 653 (11/01/99)
