FIN 365 CH 3 T/F
A finance company that lends money to high risk customers is known as a subprime lender.
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A major role of the captive finance company is to provide financing for the purchase of products manufactured or sold by the parent company.
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As the economic expansion continued through the 1990s, the demand for finance company loans increased.
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Bad debt expense and administrative costs are lower on home equity loans than other typical loans of finance companies.
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Because finance companies do not accept deposits, they do not have bank regulators providing oversight of their activities.
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Equipment leasing to customers is a function of business credit institution.
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Finance companies differ from banks in that they do not accept deposits.
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Finance companies have relied primarily on short-term commercial paper and other debt sources to finance asset growth.
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Finance companies have traditionally been subject to state-imposed usury ceilings on the maximum loan rate charged to any individual customers.
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Finance companies operate more like nonfinancial, nonregulated companies than any other type of financial institution.
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General Electric Capital Corporation is considered a captive finance company.
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Personal credit institutions may be willing to approve of collateral that depository institutions do not find acceptable.
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Sales finance institutions compete directly with depository institutions for consumer loans.
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Sales finance institutions provide financing to customers of specific retailers.
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Securitized mortgage assets are used as collateral backing secondary market securities.
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The FDIC allows its member banks to participate in payday lending.
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The growth in home equity lines of credit over the last two decades has occurred in part because of the tax deductibility of the interest payments.
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The largest 20 firms in the nondepository finance company industry account for more than 65 percent of industry assets.
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The parent institution provides a large portion of the debt that a captive finance company will use to generate personal loans.
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The typical customer of a payday lender has income of between $25,000 and $50,000 per year.
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Traditionally, motor vehicle loans and leases are the largest category of consumer loans for finance companies.
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When a finance company pools mortgages with similar characteristics and securitizes the pool, the loans are removed from the balance sheet of the finance company.
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Wholesale and retail motor vehicle loans and leases constitute the largest subcategory of business loans.
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As a percent of assets, finance companies currently rely more heavily on commercial paper as a source of financing than in 1977.
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As an industry, finance companies have escaped the merger and consolidation activity that has affected nearly every other sector of the financial services industry.
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As of 2012, real estate loans dominated the assets of finance companies.
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As of March 2012, the payday loan industry was regulated at the federal level.
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Business loans represent 60% of the loan portfolio of finance companies.
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Factoring is the process where accounts are purchased by a nonfinancial company at a discount from their face value in exchange for the responsibility of collection.
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Finance companies are subject to regulations that restrict the types of products and services they can offer to small business customers.
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Finance companies generally attract less risky customers than do commercial banks.
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Finance companies generally charge lower interest rates on consumer loans than do depository institutions.
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Finance companies generally have higher overhead than do commercial banks.
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Finance companies have been among the slowest growing FI groups in recent years.
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Finance companies have had no significant downturns in economic performance over the last two decades.
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Finance companies prefer to outwardly purchase equipment and then lease it to a business rather than finance the purchase because they receive part of the lease payment in the form of a down payment from the purchaser.
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It is impossible for an individual to be approved for a finance company loan with a bankruptcy on their record.
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Over the last 30 years finance companies have replaced real estate loans and other assets with increasing amounts of consumer and business loans.
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Personal credit institutions specialize in making equipment leases to consumers.
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Sales finance companies do not directly compete with depository institutions for consumer loans.
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The largest category of business loans of finance companies is securitized business assets.
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Wholesale loans are loan agreements between corporations and their customers at reduced interest rates.
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