finance company
Financial company is a special type of financial institutions, which operate in the consumer credit industry. Their organizational forms can be joint and co-operative.
Financial companies represented by two species: the financing of sales in installments and personal Finance. The first are engaged in the sale on credit of durables (cars, TV sets, refrigerators, etc.), the provision of loans to small entrepreneurs, financing of retail traders. The latter, as a rule, the issue of the loan mainly consumers, and sometimes Finance the sale of only one employer or one of the companies. Company of both types provide loans from one year to three years.
Passive operations of the company is mainly due to the issuance of its own securities, as well as short-term loans from commercial savings banks. The basis of active operations is the issuance of consumer loans, as well as investments in government securities. For consumer loans account for up to 90% of active operations.
Initially financial companies began to develop in the United States, especially after the Second world war. Here began to actively develop sales of durable goods on credit. In the 60-ies of the experience of the United States adopted the countries of Western Europe, Japan, and others. The development of the financial companies is possible with broad saturation of the consumer market of goods and services, as well as of active competition between them.
Financial companies are an important instrument to push the durable goods on the markets for large industrial corporations, in particular in times of low demand and the deterioration of the economic situation. A special place is the sale of motor vehicles, since a large part of them in the West is purchased on credit. Many automobile Corporation of the Western countries are establishing subsidiaries or associates financial companies with a view to accelerating the realization of their products. So, one of the leading automotive Corporation in the United States «General motors» has subsidiary financial company «General motors àêñåíòàíñ Corporation.» Many American, European and Japanese automobile companies have similar units. The peculiarity of the activity of the company consists in the fact that it charges a fairly high percentage of the credit - from 10 to 30% in various periods of fluctuations of a conjuncture.
The consumer, or the borrower, in case of impossibility of return of consumer loans is deprived of his property, which becomes the property of the Finance company.
