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LSDefine
Simple English definitions for legal terms
sales finance company
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A quick definition of sales finance company:
A sales finance 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 buy the paper arising from the sale of consumer durables on time. In simpler terms, they help people buy things like cars or furniture by purchasing the loan from the company that sold the item.
A more thorough explanation:
A sales finance company is a type of finance company that deals with loans. They either make loans themselves or purchase notes from other companies that make loans directly to borrowers. Sales finance companies do not deal directly with consumers, but instead purchase consumer installment paper arising from the sale of consumer durables "on time."
For example, if a person wants to buy a car but cannot afford to pay for it all at once, they may take out a loan from a car dealership. The dealership may then sell the loan to a sales finance company, which will collect payments from the borrower over time.
Another example is a furniture store that offers financing options for customers who want to buy furniture but cannot afford to pay for it all at once. The store may sell the loan to a sales finance company, which will then collect payments from the borrower.
These examples illustrate how sales finance companies operate by purchasing consumer installment paper from other companies and collecting payments from borrowers over time.