Financial companies – a special type of financial institutions that operate in the area of consumer credit. Their organizational forms can be cooperative and joint-stock.
Financial companies represented by two species: financing installment sales and personal finance. First engaged in the sale on credit of durable goods (cars, TVs, refrigerators, etc.), providing loans to small entrepreneurs, financing retailers. Second, as a rule, extend loans mainly to consumers, and sometimes finance the sale of only one employer or one company. Companies provide both types of loans from one to three years.
Passive operations of the company is carried out mainly through the issuance of its own securities, and short-term loans from commercial banks savings. Basis of active transactions are consumer loans, as well as investments in government securities. Consumer loans accounted for 90% of active operations.
Initially, financial companies began to develop in the U.S. especially after the Second World War. It was here that began to develop actively selling durable goods on credit. In the 60-ies. U.S. experience took over Western Europe, Japan and other development finance companies is possible with a wide supply of consumer goods and services, as well as intense competition between them.
Financial companies are an important tool push durables market for large industrial corporations, especially in the low levels of demand and deteriorating economic conditions. Occupies a special place selling cars since most of them in the West is purchased on credit. Many automobile corporations Western countries set up subsidiaries or affiliated financial companies to accelerate the sale of its products. Thus, the leading U.S. automobile corporation “General Motors” has subsidiary financial company “General Motors Corporation aksentans.” Many American, European and Japanese car companies have similar units. The originality of the company is that it charges a fairly high percentage for a loan – from 10 to 30% in different periods of oscillation conditions.
Consumer or borrower in case of impossibility of return of consumer loans deprived of his property, which becomes the property of the finance company.