Finance Companies Provide Loans

Finance companies are companies whose sole purpose is to provide loans to individuals or businesses for a variety of purposes. A person or business can finance a boat, a home, a car or the purchase of a building or business supplies.

Finance Companies vs. Banks

While banks and finance companies both provide loans to people or businesses, finance companies are an alternative to bank financing. Banks often provide financing at lower rates than finance companies as they have different requirements for loan approval.

Requirements for Financing

The requirements for obtaining financing from a finance company vary from company to company. In most cases, the weaker the credit of the person or company doing the financing, the higher the interest rate is, making the loan more expensive. Some finance companies may require collateral, such as a home or business.

Benefits

Finance companies do offer some benefits over borrowing from a traditional bank. While the loans may be a bit more expensive, finance companies are more flexible when it comes to certain things such as the type of collateral, credit risk and the purpose of the loan.

How to Apply

Applying for a loan from a finance company is often a long process. Organization is the key. Have check stubs, work history, any proof of collateral and Social Security and identification cards on hand to eliminate the need to go back and forth with your loan officer.

Source:

Encyclopedia Britannica: Finance Companies

Resource:

Loan Glossary