A finance company is an organization that extend lending to individuals and businesses. They usually charge a higher interest rates (the fees charged for the use of borrowed money) than the banks.
Many finance companies lend to customers who cannot obtain loans from banks because of their lower credit score. Such clients secure their loans with finance companies by offering collateral (by pledging to give the company a personal asset, or possession, of equal value to the loan if payment on the loan is not made).
Though banks remained the most popular source of business loans, many individuals seeking loans for small businesses have begun to prefer finance companies to banks because finance companies are less concerned with their prospective customers’ credit history. This allow smaller business owners to get their loans approved and for a longer tenure. In exchange for a more favourable terms, small business owners sometimes make their assets available as collateral.
The 3 local finance companies
Hong Leong Finance Limited
Singapore Investments & Finance Limited
Singapura Finance Ltd