27

CHAPTER
Finance Companies

PREVIEW
Suppose that you are graduating from college and that the company should lease the equipment.
about to start work at that high-paying job you were Again, you may find yourself dealing with another
offered. You may decide that your first purchase type of finance company.
must be a car. If you are not mechanically inclined, Later, you are asked to see what you can do to
you may opt to buy a new one. The problem, of increase your company’s liquidity. You may again
course, is that you do not have the $25,000 needed find that finance companies can help by purchas-
for the purchase. A finance company may come to ing your accounts receivable in a transaction called
your rescue. Most automobile financing is provided factoring.
by finance companies owned by the automobile It is clear that finance companies are an
companies. important intermediary to many segments of the
Now suppose that you have gone to work and economy. In this chapter we discuss the different
your first assignment is to acquire a new piece of types of finance companies and describe what
equipment. After doing some math, you may decide they do.

W-49

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 W-50 PART 7 The Management of Financial Institutions

History of Finance Companies

The earliest examples of finance companies date back to the beginning of the 1800s
when retailers offered installment credit to customers. With an installment credit
agreement, a loan is made that requires the borrower to make a series of equal pay-
ments over some fixed length of time. Prior to installment credit agreements, loans
were usually of the single-payment or balloon type. A balloon loan requires the
borrower to make a single large payment at the loan’s maturity to retire the debt.
Installment loans appealed to consumers because they allowed them to make small
payments on the loan out of current income.
Finance companies came into their own when automobile companies began
mass marketing. In the early 1900s, banks did not offer car loans because cars were
considered consumer purchases rather than productive assets. Many people wanted
to buy cars but found it difficult to raise the purchase price. The automobile com-
panies established subsidiaries, called finance companies, to provide installment
loans to car buyers.
Soon many other retailers adopted the idea of providing financing for consum-
ers who wanted to buy their goods. They found not only that sales increased but also
that the subsidiary finance company was profitable.
Eventually, banks recognized the value of consumer loans and began offering
them too. By offering lower interest rates, banks rapidly gained the larger part of the
consumer credit market. By the end of 2015, banks held $1,271 billion in consumer
loans, compared to $895 billion by finance companies.1
As the proportion of credit offered by finance companies to consumers declined,
the proportion offered to businesses in the form of sales and leasing increased.
At the end of 2015, for example, finance companies held $423 billion of business
loans.

Purpose of Finance Companies

Finance companies are money market intermediaries. Recall from Chapter 11 that
the money markets are wholesale markets. This means that most securities that
trade there have very large denominations. The minimum investment of $100,000
makes it impossible for individuals and most small companies to trade in this mar-
ket. A second obstacle is that consumers and small companies lack the credit stand-
ing necessary to borrow in the money markets. These factors exclude consumers
and small businesses from being able to take advantage of the low interest rates
available on money market securities.
Finance companies allow smaller participants access to this market by selling
commercial paper and using the proceeds to make loans. (In Chapter 11 we noted
that finance companies are the largest sellers of commercial paper.)
The financial intermediation process of finance companies can be described by
saying that they borrow in large amounts but often lend in small amounts—a pro-
cess quite different from that of commercial banks, which collect deposits in small
amounts and then often make large loans.
A key feature of finance companies is that although they lend to many of the
same customers who borrow from banks, they are virtually unregulated compared

1
Source: http://www.federalreserve.gov/econresdata/releases/statisticsdata.htm.

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 CHAPTER 27 Finance Companies W-51

to commercial banks and thrift institutions. States regulate the maximum amount
they can lend to individual consumers and the terms of the debt contract, but there
are no restrictions on branching, the assets they hold, or how they raise their funds.
The lack of restrictions enables finance companies to tailor their loans to customer
needs better than banking institutions can.
Finance companies exist to service both individuals and businesses. Consumer
finance companies that focus on loans to individuals differ from banks in significant
ways. First, consumer finance companies often accept loans with much higher risk
than banks. These high-risk customers may not have any source of loans other than
the consumer finance company. Second, consumer finance companies are often
wholly owned by a manufacturer who uses the company to make loans to consumers
interested in purchasing the manufacturer’s products. For example, all U.S. automo-
bile companies own consumer finance companies that fund auto loans. Often these
loans are made on very favorable terms to encourage product sales.
Business finance companies exist to fill financing needs not served by banks,
such as lease financing. Manufacturers of business products often own finance com-
panies for the same reasons as automobile companies: Sales can be increased if
attractive financing terms are available.

Risk in Finance Companies

Like other financial institutions, finance companies face several types of risk. The
greatest is default risk, the chance that customers will fail to repay their loans. As
mentioned earlier, many consumer finance companies lend to borrowers who are
unable to obtain credit from other sources. Naturally, these borrowers tend to
default more frequently. The delinquency rates for these finance companies are
usually higher than those for banks or thrifts. They recoup the losses they suffer
from bad loans by charging higher interest rates, often as much as twice that charged
by banks. When economic conditions deteriorate, finance company customers are
often the first to be unemployed, and defaults cause losses.
Another type of risk finance companies face is liquidity risk. Liquidity risk
refers to problems that arise when a firm runs short of cash. For example, a bank
may have a liquidity problem if many depositors withdraw their funds at once.
Finance companies run the risk of liquidity problems because their assets, consumer
and business loans, are not easily sold in the secondary financial markets. Thus, if
they are in need of cash, they must borrow. This is not difficult for larger finance
companies because they have access to the money markets and can sell commercial
paper, but borrowing may be more difficult for smaller firms.
Offsetting the lack of a secondary market for finance company assets is the fact
that none of the firm’s funds come from deposits, so unexpected withdrawals do not
occur. The greater problem is that a change in the perceived risk of the finance
company may make it difficult to roll over its short-term debt instruments. The
term roll over means to renew the debt each time it matures.
Interest-rate risk is a major problem for banks and thrifts but not of great con-
GO
ONLINE cern to finance companies. Recall that interest-rate risk refers to a decline in value
Access Federal Reserve of fixed-rate loans when market interest rates rise. Banks and thrifts hold more long-
releases of financial compa-
term loans than finance companies do and hence are subject to greater interest-rate
nies at www.federalreserve
.gov/Releases/G20/current/ risk. Finance companies can still be affected by changing interest-rate levels because
default.htm. their assets (loans) are not as interest-rate sensitive as their liabilities (borrowings).

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 W-52 PART 7 The Management of Financial Institutions

Types of Finance Companies

There are three types of finance companies: business, sales, and consumer.
Figure 27.1 shows the distribution of loans for finance companies. Consumer loans
are the most common type. Note that loans secured by real estate can be made to
both businesses and consumers but more often result when consumers obtain sec-
ond mortgages on their homes. (Second mortgage loans are discussed in Chapter 14.)

Business (Commercial) Finance Companies

In the early 1900s, commercial banks were reluctant to lend money secured by a
company’s accounts receivable (funds owed to the company by other businesses
and individuals) because the Federal Reserve discounted or bought only promis-
sory notes that were related to productive purposes, such as financing for a fac-
tory. Not until after the Great Depression did commercial banks begin competing
for loans secured by accounts receivable. By this time, finance companies were
offering to make loans that were secured by equipment and inventory to busi-
nesses as well. Finance companies gained the reputation of being more innova-
tive than banks at finding ways to finance small businesses. One reason they
could be more flexible was their near-total absence of regulation. Because there
are no depositors to protect, the government has never found the need to restrict
the activities of these types of firms. Figure 27.2 reports the different types of
business loans made by finance companies. Motor vehicle financing is the most
prevalent.

Factoring Business finance companies provide specialized forms of credit to

businesses by making loans and purchasing accounts receivable at a discount;
this provision of credit is called factoring. For example, a dressmaking firm
might have outstanding bills (accounts receivable) of $100,000, due from the retail
stores that have bought its dresses. If this firm needs cash to buy new sewing

Business Loans
29%

Consumer Loans
63%
Real Estate Loans
8%

FIGURE 27.1 Types of Loans Made by Finance Companies, 2016

Source: http://www.federalreserve.gov/releases/g20/current/g20.htm.

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 CHAPTER 27 Finance Companies W-53

Other Business
Receivables
25%
Motor Vehicles
37%

Equipment Leases
10%

Equipment Loans
28%

FIGURE 27.2 Types of Business Loans Made by Finance Companies, 2016

Source: http://www.federalreserve.gov/releases/g20/current/g20.htm.

machines or material to make more clothes, it can sell its accounts receivable for,
say, $90,000 to a finance company, which is now entitled to collect the $100,000
owed to the firm.
Factoring is a very common practice in the apparel industry. One advantage of
factoring is that the finance company (called a factor in this situation) usually
assumes responsibility for collecting the debt. If the debt becomes uncollectible, the
factor suffers the loss. This removes the need for the apparel company to have a
credit department or be involved in the collection effort.
Factors usually check the quality of the firm’s receivables before accepting
them. The factoring arrangement works well because the factor is able to specialize
in bill processing and collections and to take advantage of economies of scale.
Besides the cost savings from reduced salary expenses, many firms like to use fac-
tors because they do not want their relationship with their customers spoiled by
having to collect money from them.
Finance companies also provide financing of accounts receivable without taking
ownership of the accounts receivable. In this case, the finance company receives
documents from the business giving it the right to collect and keep the accounts
receivable should the business fail to pay its debt to the finance company. Many
firms prefer this arrangement over factoring because it leaves them in control of
their accounts receivable. They can work with their customers if special arrange-
ments are required to ensure payment.

Leasing Business finance companies also specialize in leasing equipment (such

as railroad cars, jet planes, and computers), which they purchase and then lease
to businesses for a set number of years. Indeed, much of the growth in finance
companies in recent years has come from business leasing. Under a lease, the finance
company buys the asset and then leases it to the business. One advantage of leasing

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 W-54 PART 7 The Management of Financial Institutions

is that repossession of the asset is easier. Repossession occurs when the finance
company takes the asset back when the lessee (the firm that is leasing the asset)
fails to make the payments on time. Lenders can repossess an asset under loan and
lease contracts, but it is easier under a lease because the finance company already
owns the asset, so no transfer of title of ownership is required.
Finance companies that are subsidiaries of equipment manufacturers have an
additional advantage over banks. When a piece of equipment must be repossessed,
the manufacturer is in a better position to re-lease or resell the asset.
The owner of an asset is able to depreciate the asset over time and to capture a
tax savings as a result. If the firm that plans to use the asset does not have income
to offset with the depreciation, the tax saving may be more valuable to the finance
company. Part of this tax benefit can be passed on to the lessee in the form of lower
payments than would be possible on a straight loan. In effect, the government is
supporting the equipment purchase in the amount of the tax savings. This support
is lost unless a firm earning income actually owns the asset.
A final advantage to leasing is that the lessee is often not required to make as
large an up-front payment as is usually required on a straight loan. This conserves
valuable working capital and is often the critical factor in leasing decisions.

Floor Plan Loans Some auto manufacturers require that dealers accept auto
deliveries throughout the year, even though sales tend to be seasonal. To help
dealers pay for their inventories of cars, finance companies began offering floor
plans. In a floor plan arrangement, the finance company pays for the car dealership’s
inventory of cars received from the manufacturer and puts a lien on each car on the
showroom floor. When a car is sold, the dealer must pay off the debt owed on that
car before the finance company will provide a clear title of ownership. The dealer
must pay the finance company interest on the floor loans until the inventory has
been sold. Floor plan financing is most common in the auto industry because cars
have titles that the finance company can hold to secure its loans. Floor plan financing
exists in other industries where assets with titles are involved, such as construction
equipment and boats.
A close relationship usually evolves between the finance company and the
dealer. Consider that each sale requires correspondence between the firms. As a
result of the close relationship, it is common to find that the same finance company
also provides retail financing for the dealer’s customers. The help that an aggressive
finance company can provide by financing weak credit customers also helps the
finance company’s floor loans get paid.
Note that banks also provide floor plan financing; however, such loans tend to
be high-maintenance. The unregulated, lower-cost structure of finance companies
often makes them the preferred intermediaries.
Finance companies enjoyed growth in business loans to 2009, when it dropped
during the recession (see Figure 27.3).

Consumer Finance Companies

Consumer finance companies make loans to consumers to buy particular items such
as furniture and home appliances, to make home improvements, or to help refinance
small debts. Consumer finance companies are separate corporations (like HSBC) or
are owned by banks (Citicorp owns Person-to-Person Finance Company, which
operates offices nationwide). Typically, these companies make loans to consumers

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 CHAPTER 27 Finance Companies W-55

Business Loans
Outstanding ($ billions)
600

500

400

300

200

100

0
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

FIGURE 27.3 Finance Company Business Loans, 1994–2015

Source: http://www.federalreserve.gov/releases/g20/current/g20.htm.

who cannot obtain credit from other sources due to low income or poor credit his-
tory. Finance companies will often accept items for security, such as old cars and
old mobile homes, which would be unacceptable to banks. Because these loans are
often high in both risk and maintenance, they usually carry high interest rates.
There are two exceptions: Finance companies are becoming more active in
making home equity loans, loans secured by a second mortgage on the borrower’s
home. The Tax Reform Act of 1986 ended the ability to deduct most consumer inter-
est from income when computing taxes. Unchanged, however, was the right to
deduct interest paid on loans against a residence. This lowers the effective interest
rate by a factor of 1 minus the tax rate.

EXAMPLE 27.1
After-Tax Suppose that the interest rate on a home equity loan is 8% and that the marginal tax
Effective is 28%. What is the effective after-tax cost of the loan?
Interest Rate Solution
The effective after-tax cost of the loan would be 5.76%.
Effective interest rate = interest rate * (1 - marginal tax rate)

where
Interest rate = 0.08
Marginal tax rate = 0.28
Thus,
Effective interest rate = 0.08 * (1 - 0.28) = 0.0576 = 5.76%

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 W-56 PART 7 The Management of Financial Institutions

The reduced effective interest rates have made home equity loans very popular.
Most consumers continue to obtain home equity loans through banks. However,
lower-income consumers and those with poor credit histories obtain them from
finance companies.
The disadvantage to home equity lending is that the lender will usually be in
second position on the title. This requires the lender to pay off the first mortgage
before taking ownership of the property. We discussed second mortgages in detail
in Chapter 14.
Another growth area for consumer finance companies is in retail credit cards.
Many retailers like to offer their customers a “private label” credit card to increase
sales. Large retailers operate their own credit card programs either in-house or
through finance subsidiaries, but smaller retailers may contract with a finance com-
pany. When the retailers accept applications for credit cards, they pass them on to
the finance company for approval. The finance company then sends the retailer’s
card to the customer. The finance company provides billing and collection services
for the account. The consumer may never be aware that a finance company is
involved in these transactions. Thus, finance companies allow smaller retailers to
provide a service that only larger retailers could offer otherwise.

Sales Finance Companies

Sales finance companies make loans to consumers to purchase items from a par-
ticular retailer or manufacturer. Sears, Roebuck Acceptance Corporation, for exam-
ple, finances consumer purchases of all goods and services at Sears stores. Sales
finance companies compete directly with banks for consumer loans and are used by
consumers because loans can frequently be obtained faster and more conveniently
at the location where an item is purchased.
A sales finance company, also called a captive finance company, is owned by
the manufacturer to make loans to consumers to help finance the purchase of the
manufacturer’s products. These captive finance companies often offer interest rates
below those of banks and other finance companies to increase sales. Profits made
on the sale offset any losses made on the loans.

Regulation of Finance Companies

As noted, because there are no depositors to protect and no government deposit
insurance is involved, finance companies are far less regulated than banks and
thrifts. The exception to this is when a finance company is acting as a bank holding
company or is a subsidiary of a bank holding company. (Recall from Chapter 19 that
bank holding companies are firms that own the stock of one or more banking institu-
tions.) In these cases, federal regulations are imposed. Finance companies without
a direct relationship to a bank are regulated by the state.
The federal regulations that do affect finance companies are aimed at protecting
unsophisticated customers. Regulation Z (the “truth in lending” regulation)
requires that banks and finance companies disclose the annual percentage rate
charged on loans in a prominent and understandable fashion. The lender must also
disclose what the total interest cost of the credit will be over the life of the loan.
The federal bankruptcy laws were revised in 2005 to tighten up on some of the
abuses finance companies and banks were suffering from debtors declaring bank-
ruptcy to eliminate loan obligations. The revisions set “means tests” that restrict

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 CHAPTER 27 Finance Companies W-57

debtors from declaring bankruptcy if they have sufficient income to make repay-
ment. Other components of the law make it more difficult and costly to go bankrupt
and require audits. Despite these changes, however, many borrowers find bank-
ruptcy attractive. For example, the homestead provision allows individuals to keep
the equity in their homes even after declaring bankruptcy. Though the new law sets
limits on the amount of the homestead exemption, many finance company custom-
ers have low equity to begin with, so are not affected. This is a serious concern for
finance companies and is one reason they usually demand adequate security before
making a loan.
The level of interest rates that finance companies can charge customers is lim-
ited by usury statutes. Usury is charging an excessive or inordinate interest rate on
a loan. The permissible interest-rate ceiling depends on the size and maturity of the
loan, with small, short-term loans having the highest rates. The usury limits vary by
state, but most are sufficiently high not to be a limiting factor to reputable finance
companies. Some critics of usury laws counter that these laws do not protect con-
sumers but instead prevent marginal or high-risk borrowers from obtaining credit.
State and federal government regulations impose restrictions on finance com-
panies’ ability to collect on delinquent and defaulted loans. For example, many
states restrict how aggressive a finance company can be when calling customers and
prohibit them from calling late at night or at work. Regulations also require that
certain legal procedures be followed and that the lender bear the expense of collect-
ing on the bad debt.
In contrast to consumer lending, few regulations limit finance companies in the
business loan market. Regulators feel that businesses should be financially sophisti-
cated enough to protect themselves without government intervention.

Finance Company Balance Sheet

Table 27.1 presents the aggregate balance sheet for finance companies.

Assets
The primary asset of finance companies is their loan portfolio, consisting of con-
sumer, business, and real estate loans. The largest category of loans is to consumers,
currently representing 49% of total assets.
Because of the high risk of loans made to consumers, more loans default. To
protect their income against these defaults, finance companies allocate a portion of
income each period to an account to be used to offset losses, called the reserve for
loan losses. The reason for having a reserve for loan losses is to smooth losses over
time. By recognizing a set amount of loss each period, different losses in one period
over another do not show up on the bottom line. Banks and thrifts also maintain a
reserve for loan losses; however, it does not need to be as large as that for finance
companies.

Liabilities
Because finance companies do not accept deposits, they must raise funds from
other sources to fund their loans. An important source of funds is commercial paper
(discussed in detail in Chapter 11). Recall that commercial paper is unsecured,
short-term debt issued by low-risk companies. Its advantage over bank loans and

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 W-58 PART 7 The Management of Financial Institutions

TABLE 27.1 Consolidated Finance Company Balance Sheet, 2015

Millions of Dollars Percentage of Total

Assets
Consumer loans 895,456 48.9%
Business loans 423,521 23.1%
Real estate loans 119,526 6.5%
Less reserve for loan losses (20,508) –1.1%
Other assets 412,747 22.5%
Total Assets 1,830,743 100.0%
Liabilities
Bank loans 152,659 8.3%
Commercial paper 115,228 6.3%
Owed to parent 156,290 8.5%
Notes, bonds, and debentures 956,594 52.3%
Other liabilities 203,742 11.1%
Total Liabilities 1,584,512 86.6%
Equity 246,230 13.4%
Total Liabilities and Equity 1,830,743 100.0%

Source: http://www.federalreserve.gov/releases/g20/hist/fc_hist_q_levels.html.

other sources of funds is that it carries a low interest rate. Finance companies also
obtain funds by borrowing from other money market sources and occasionally from
banks (about 8% of assets). Captive finance companies have the option of borrowing
directly from their parent corporation.
On average, finance companies have close to a 14% capital-to-total-assets ratio.
This compares favorably to the 9% to 10% usually observed for banks and savings
and loans.

Income
Finance company income derives from several sources. The primary source, of
course, is interest income from its loan portfolio. Finance companies also earn
income from loan origination fees. These are fees they charge borrowers for making
a loan. These fees cover the processing costs involved. Many finance companies also
sell credit insurance, which pays off any balance due on a loan if the borrower
should die or become disabled. Credit insurance tends to generate very high profits
compared to other types of life insurance coverage. Some finance companies earn
additional income from expanding their operations to include income tax prepara-
tion services.

Finance Company Growth

Finance companies grew rapidly in the late 1980s and, after a pause, the 1990s.
This growth was fueled by the expansive economy, which caused the demand for

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 CHAPTER 27 Finance Companies W-59

Total Assets
($ trillions)
2.4

2.1

1.8

1.5

1.2

0.9

0.2

0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

FIGURE 27.4 Growth of Finance Company Assets, 1980–2015

Source: http://www.federalreserve.gov/releases/g20/hist/fc_hist_q_levels.html.

finance company business loans to increase. Finance company assets continued to

grow until the recession in 2008. They have still not yet regained their pre-reces-
sion level. Figure 27.4 traces the growth in finance company assets from 1980
to 2015.

SUMMARY
1. Finance companies were initially owned by manu- rates. Finance companies also make business loans
facturers who wanted to provide easy financing to and offer leases.
help the sales of their products. The concept rapidly 4. The three types of finance companies are busi-
expanded when automobile financing became more ness, consumer, and sales. Business finance compa-
commonplace. nies finance accounts receivable (often through an
2. Finance companies sell short-term securities in the arrangement called factoring) and provide inven-
money markets and use the proceeds to make small tory loans and leases. Consumer finance companies
consumer and business loans. In this way, they act as make loans to high-risk customers for the purchase
intermediaries in the money markets. They typically of autos and appliances and to refinance other debt.
borrow in large amounts and lend in small amounts. Sales finance companies finance a firm’s sales, often
3. Another purpose served by consumer finance compa- through in-house credit or credit cards.
nies is servicing higher-risk customers. As a result of 5. Because there are no deposits at risk, finance compa-
making these high-risk loans, default is the primary nies are less regulated than banks and thrifts. They are
risk finance companies face. Finance companies com- subject, however, to consumer regulations that limit
pensate for default risk by charging higher interest interest rates and require disclosure of the cost of loans.

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 W-60 PART 7 The Management of Financial Institutions

KEY TERMS
balloon loan, p. W-50 floor plans, p. W-54 repossession, p. W-54
captive finance company, installment credit, p. W-50 reserve for loan losses,
p. W-56 leasing, p. W-53 p. W-57
default risk, p. W-51 liquidity risk, p. W-51 roll over, p. W-51
factoring, p. W-52 Regulation Z, p. W-56 usury, p. W-57

QUESTIONS
1. Interest-only mortgages seem to benefit the home- 9. Many auto dealers finance their inventory using floor
owners with irregular income. Explain how it can be plan loans advanced by finance companies. What is
risky in the future. a floor plan loan?
2. What caused finance companies to grow rapidly in 10. Many manufacturers own finance companies that
the early 1900s? finance the purchase of the manufacturers’ products.
3. How do finance companies attract consumers who What are these finance companies called?
are already using the commercial banking services 11. Why are home equity loans popular?
and facilities? 12. Describe the sustainability strategies adopted by
4. How did finance companies survive during the finan- finance companies in the aftermath of the global
cial crisis as compared to commercial banks? financial crisis.
5. Compare the liquidity risk suffered by finance com- 13. What does Regulation Z require of finance companies?
panies with the same risk faced by commercial banks. 14. As finance companies seek to earn higher income,
6. Define and compare the systematic and unsystematic their interest rates are comparatively higher than the
risks of finance companies. Give a few of examples commercial banks. Discuss.
of each. 15. Why is it that the activities of finance companies in
7. What are the advantages and disadvantages of factor- the business loan market are not as regulated as their
ing to a finance company? activities in the consumer loan market? What is the
8. What are the advantages and disadvantages of assets focus of regulation in this industry?
being leased?

WEB EXERCISES
Finance Companies b. Do finance companies make more consumer loans,
1. The Federal Reserve maintains extensive data on real estate loans, or business loans?
finance companies. Go to http://www.federalreserve c. Which type of loan has grown most rapidly over
.gov/releases and find Finance Companies G.20. the past five years?
a. Review the terms of credit for new car loans. What
is the most recent average interest rate, and what
is the term to maturity? How much is the average
new car loan offered by finance companies?

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