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Finance Companies
Finance companies are specialized financial institutions. Basically, a finance company makes loans. There are consumer finance companies, and there are commercial finance companies. There are also finance companies that lend to businesses as well as to individuals.
Unlike banks, they do not take deposits and they are not "full-service" financial institutions. The loans made by finance companies are typically at higher interest rates than banks, and they tend to loan to companies that might not qualify for a loan from a commercial bank.
Some finance companies are owned by commercial banks. Generally speaking, finance companies are short-term lenders. They cannot issue Letters of Credit. Their principal activity is making loans, and there are very few finance companies that participate in international trade.
Edited by Michael C. Dennis, author of "Credit and Collection Manager's Concise Desk Reference"