Finance companies are businesses that offer short-term loans at substantially higher rates of interest than banks;because of the high interest rates they charge and other factors,finance companies typically are the lender of last resort for individuals and businesses whose credit limits have been exhausted and/or those with poor credit ratings (therefore,the risk is higher).

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Finance Companies

Question 77

Multiple Choice

Finance companies

A) typically function as the lender of last resort for individuals and businesses with poor credit ratings or whose other lines of credit have been exhausted.
B) offer lower interest rates than a bank and a lower rate of risk.
C) usually do not require collateral.
D) do not make loans to individuals.
E) are insured by the FDIC but at a lower rate than regular banks.

Correct Answer: