Legal Definitions - consumer finance company

A consumer finance company is a type of nonbank company that provides loans directly to consumers or purchases notes from other companies that make loans to borrowers. These companies specialize in extending credit to individuals for personal use, such as buying a car or paying for medical expenses.

• Small-loan company: A finance company that deals directly with consumers in extending credit. For example, a small-loan company may offer short-term loans to individuals who need to cover unexpected expenses.
• Sales finance company: A finance company that purchases consumer installment paper arising from the sale of consumer durables "on time." For example, a sales finance company may purchase the installment contracts for a car dealership's customers, allowing the dealership to receive payment upfront while the finance company collects payments from the customers over time.

These examples illustrate how consumer finance companies provide credit to individuals for personal use or to finance purchases. They may offer different types of loans, such as short-term or installment loans, and may specialize in specific industries, such as automotive financing.