Finance Company Definition

A finance company is any company that makes loans to clients. Finance companies are not banks and do not receive deposits. Instead, they obtain funding from banks, the money market, or private investments. There are various types of finance companies including consumer finance companies that make small, direct loans; sales finance companies that write or buy loans for automobiles and consumer goods; and commercial finance companies that make larger loans to manufacturers and other businesses. Finance companies utilized by individuals usually offer loans with high interest rates.