9:32
[kevin oleary]
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LSDefine
Simple English definitions for legal terms
acceptance company
Read a random definition: label-and-significant-characteristics test
A quick definition of acceptance company:
An acceptance company is a type of finance company that purchases consumer installment paper from other companies that directly make loans to borrowers. They do not deal directly with consumers but instead focus on buying consumer durables sold on installment plans. Other types of finance companies include commercial finance companies that make loans to manufacturers and wholesalers, and consumer finance companies that extend credit directly to consumers.
A more thorough explanation:
An acceptance company is a type of finance company that is also known as a sales finance company. It deals with loans by either making them or purchasing notes from another company that directly makes loans to borrowers.
- Commercial finance company: A finance company that makes loans to manufacturers and wholesalers. It is also known as a commercial credit company.
- Consumer finance company: A finance company that extends credit directly to consumers. It is also known as a small-loan company.
- Sales finance company: A finance company that purchases consumer installment paper arising from the sale of consumer durables on time. It does not deal directly with consumers.
For example, if a person wants to buy a car on installment, the car dealer may sell the installment paper to a sales finance company. The sales finance company will then collect the payments from the person who bought the car. This way, the car dealer gets the money upfront, and the sales finance company earns interest on the loan.
Another example is a consumer finance company that offers personal loans to individuals. These loans may be used for various purposes, such as paying for medical bills or home repairs. The consumer finance company will charge interest on the loan, which the borrower will have to pay back over time.
Overall, acceptance companies play an important role in providing loans to individuals and businesses. They help to facilitate the purchase of goods and services by extending credit to those who may not have the funds to pay for them upfront.