Finance companies obtain a significant portion of their short-term financing from

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Finance companies typically obtain short-term financing by issuing commercial paper, which typically has maturities of less than 270 days. This provides them with a flexible source of funding that can be easily rolled over or paid off as needed. Other sources of short-term financing, such as time and savings deposits or transaction accounts, are typically used by traditional banks. Long-term bonds and equity are sources of long-term financing rather than short-term financing.

Finance Companies Obtain a Significant Portion of Their Short-Term Financing