Finance Companies

The basics

by A.W. Berry

If a homeowner or small business is looking for a loan, an online banking account, or other financial service or product, several finance management companies exist to offer assistance. Knowing which company to choose and why can be important as it can help lower costs and potentially lead to improved terms of agreement. For starters, finance companies online may offer lower interest rates due to lower operating costs incurred through online business. Any finance company may be able to extend credit and/or loan, but the type of credit can vary considerably. For example, a small business may prefer a collateralized loan to preserve capital and fund a project whereas a homeowner may want to refinance a home at a lower rate or obtain a home equity line of credit. In other words, some finance companies specialize in different types of financial services which can 1) improve the service, 2) increase the likelihood of obtaining a loan, and 3) reduce the cost of the loan or service.

Learning about commercial finance companies involves studying what they specialize in and comparing that to other specialized financial institutions. How do they perform? What is the profit margin? Are the fees and interest rates competitive? Do they have high turnover ratios? Are they FDIC insured? How well capitalized are they? What are their lending terms? These are all questions a homeowner or small business owner may want to ask to insure not only the quality of service but the availability and viability of a continued relationship with the commercial finance company.

There are many ways to research a finance company including contacting organizations that track the performance of financial institutions. Visiting the websites of the Better Business Bureau (BBB), the National Association of Consumer Advocates (NACA), and the Federal Deposit Insurance Corporation (FDIC) may all be of assistance in determining the credibility of finance management companies in addition to comparing financial services. Depending on the type of financial product or service, whether it is a business credit card, equipment loan, or home improvement loan chances are there will be several commercial finance companies and finance companies online that are competing for business. Understanding each finance company's objective, financial credentials, financial products etc. by contacting them and/or visiting their website or the website(s) of consumer advocates, can equip both homeowners and small business owners with important information that could assist in making managing finances more affordable, serviceable, and appropriate for particular financial goals.

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