Finance Companies Offer Financial and Advisory Services
A finance company is an entity that offers money in the form of short-term loans. It is a business that provides secured and unsecured loans to retailers, producers, and individual borrowers.
Finance Companies vs. Banks
Both entities are similar in that they offer loans to customers. The main difference is that banks accept deposits and offer savings and transactional accounts while finance companies don’t. They use other sources of financing such as money markets and banks. These entities are sometimes divisions of holding firms and manufacturers.
Types of Financing Offered
The types of loans offered to customers depend on the establishment. Some companies provide the full selection of products, including dental and medical loans, home improvement and appliance loans, and personal loans. They also offer back-to-school, vacation, emergency, and consolidation loans, along with accounts receivables acquisition. They extend loans for the purchase of boats, motorcycles, cars, and other vehicles. Borrowers can also apply for a furniture or appliance loan and buy major household appliances such as fridges, ovens, and others. Some companies also offer dental and medical loans to pay for hospital stays and dental care. Borrowers use the money for cosmetic dentistry procedures like dental implants, veneers, whitening, and other procedures that are not covered by their insurance plan. Finance companies also offer vacation loans to people who need money for their dream vacation. They can use the funds to buy special equipment like skis or snorkeling gear. Or they can use it to cover their travel expenses, including plane tickets, hotel, and cash in hand.
Students and their parents can apply for back-to-school loans to pay tuition and board, school supplies, books and textbooks, registration fees, and other expenses. Borrowers can also apply for emergency loans to meet unexpected expenses such as medical bills and household and car repairs. Finance companies also offer consolidation loans to borrowers who have high-interest credit cards. They can transfer their balances and enjoy low monthly payments as a result.
Business customers can apply for a loan to fund medical and dental equipment, vehicles, power equipment, machinery, and other purchases. Individual customers use the money for home repairs, floor covering, home fitness equipment, and even jewelry. These companies offer loans with flexible payment options, including non-recourse loans and save as cash plans. Borrowers can choose from different alternatives, including defined terms of repayment and fixed-rate loans.
Some companies also specialize in advisory services, including mergers and acquisitions, restructuring, and capital fundraising. These entities are usually divisions of banks and other establishments. They offer products and services such as analysis of the financial prospects and business operations of companies, their capital structure and leverage capacity, and strategic alternatives and solutions. Finance divisions offer valuation analysis and develop reorganization and restructuring plans for business and corporate clients. They work in cooperation with legal advisors and other professionals. Advisors offer assistance to businesses that seek to sell their assets and to companies looking to acquire real estate, assets, and other businesses. They offer a large array of services, including assessment and analysis of acquisition targets, advice on financial transactions, structuring, cost, timing, and valuation analysis. These companies negotiate on behalf of clients and guide them through the sales process. They prepare memorandums and other documentation and work with co-investors and investors. In addition, they offer advice to businesses and family-owned companies that seek to raise equity or capital.
Other Types of Finance Companies
Some entities specialize in certain industry sectors and offer loans to companies working in these sectors. For example, there are firms that offer equity and debt products to businesses which operate in the gas and oil, telecommunications, and power supply sectors. Such companies offer a large array of products and services, including convertible debentures, mezzanine, subordinated, and securitized debt, as well as term loans. They also offer preference shares and debentures. Businesses use mezzanine capital to purchase real estate and for leverages buyouts. While it is considered a costly form of financing, it is more affordable than other types, including high-yield and senior loans. Debenture is a form of debt for which collateral is not required. It allows large businesses to borrow and raise capital. There are also auto finance companies that offer loans for the purchase of new and used cars and other vehicles. Borrowers can refinance with them and enjoy benefits such as lower monthly payments and flexible payment options. Refinancing is a good choice for borrowers with excellent credit scores provided that interest rates are falling.
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