Commercial finance companies usually charge a higher interest on secured short-term loans than commercial banks because the finance companies generally ends up with higher-risk borrowers.

Question

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Commercial finance companies typically work with borrowers who have lower credit scores or less collateral, making them higher-risk borrowers. Due to this increased risk, finance companies charge higher interest rates for short-term loans to mitigate their risk and protect their profits. Commercial banks, on the other hand, typically work with more established businesses and borrowers with stronger financials, allowing them to offer lower interest rates.

Commercial Finance Companies Usually Charge a Higher Interest on Secured