Exam 3: Finance Companies

A major role of the captive finance company is to provide financing for the purchase of products manufactured or sold by the parent company.

A person with a history of bad credit and an inconsistent record of payments on other debt is most likely to find a short-term loan through a

Factoring is the process where accounts are purchased by a nonfinancial company at a discount from their face value in exchange for the responsibility of collection.

This type of finance company competes directly with deposit-taking institutions for consumer loans because they can frequently process loans faster and more conveniently.

Finance companies have relied primarily on short-term commercial paper and other debt sources to finance asset growth.

Bad debt expense and administrative costs are lower on home equity loans than other typical loans of finance companies.

Finance companies prefer to outwardly purchase equipment and then lease it to a business rather than finance the purchase because they receive part of the lease payment in the form of a down payment from the purchaser.

As the economic expansion continued in Canada and the U.S. through the 1990s, the demand for finance company loans increased.

Finance companies have had no significant downturns in economic performance over the last two decades.

Finance companies have traditionally been subject usury ceilings on the maximum loan rate charged to any individual customer.

Prior to the financial crisis that began in 2007, finance companies