KIC000122 - Sources of Finance Company_gFunds(cont'd Depos...

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Unformatted text preview: Sources of Finance Company _gFunds (cont'd) Depos its D Some gates allow finance companies to offer mstornsr deposns similar to those of depository institutions Bonds n The decision to issue bonds versus some alternative short-tsrm financing depends on the co y’s balance sheet and expectations about future I When assets are loss rate WflllVe than liabilities and interest rams are enacted to Increase. bonds pmvlde financing that is insulated from rising market rates Capital El Finance companies can build capital by ®———- or by issuing stock in Finance companies maintain a low level of capital - Uses of Finance Company Funds 3 I Consumer loans P . .3... - _ mm? . n One of the most p0 tar consumer loans is the automobile loans offered by a meme company that is owred by a car manufacturer I cog . General Motors Acceptance Corporation a Finance companies otter personal loans for home improvement, mobile homes. and a varietyot‘ other personal expenses a Consumer loans are oflen sewred by a ctr-signer or by real 97°99"! n Maturitiss on personal loans are typically less than five years in Some finance companies offer credit card losns through a particular retailer in The main competition in the sumsr loan market is from Wmfcill bank: and _.,_ Uses of Finance Company Funds (Cont'd) I Business loans and leasing D Commercial Icons: I Are obtained by companies to finance the cash cycle I Are anon term but may . Ara often badisd lay or accounts receivable I Are sometimes used to menu; L309 (3 Finance companies commonly act as @——-tor amounts receivable a firrn‘s receivables at a discount and are They responsible for processing and collecting the balances I Factoring reduces a business's processing costs and provides short-term financing r-r ...
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