FINANCE COMPANY: Definition, Types & Top 10 Companies

FINANCE COMPANY

Financial companies are an important, if unseen, part of most Americans’ daily lives, with insurance, banking, credit cards, and mortgage payments. But who are these companies that approve your credit card applications, allow you to buy a home, and pay your hospital bills? In this article, we will define a finance loan service company and list the best professional finance companies in the United States based on their total revenue in 2020.

What Is the Definition of a Finance Company?

A finance company is an organization that makes loans to individuals and businesses. A finance company, unlike a bank, does not accept cash deposits from customers and does not offer some services that banks do, such as checking accounts. Finance companies profit from the interest rates (fees charged for borrowing the money) they charge on their loans, typically higher than the interest rates charged by banks to their clients.

How Does a Finance Company Operate?

A finance company makes loans to their customers at higher interest rates than banks. Loan interest is how finance companies make money. Many people have poor credit histories and will seek loans from finance companies. These people put up valuable assets as security for their loans, usually by promising to give them to the finance company if they don’t pay back the loan.

Stefano might have to use his car as collateral if he borrows $8,000 from a finance company to start his cleaning business. If Stefano fails to make his loan payments (i.e., defaults on loan), the company will seize his vehicle.

Types of Finance Company

Finance companies are classified into three types:

  • Consumer finance companies.
  • Sales finance companies.
  • Commercial finance companies.

Consumer finance companies give small loans to people, but the terms are usually better for the company than for the person getting the loan. This category includes direct-loan and payday loan companies, which have a terrible reputation for taking advantage of people who are struggling and in need of quick cash.

Consumer finance companies offer subprime loans with higher interest rates than the market average. Many states in the United States have small-loan laws that make it illegal for consumer finance companies to charge interest rates higher than 25%.

The second type of company is a sales finance company, also known as an acceptance company. With a few key differences, these finance companies provide services to businesses in the same way that direct-loan companies provide services to individuals. Borrowers from sales finance companies are typically large corporations with excellent credit ratings. A large corporation does not need to put up collateral to secure a loan. Furthermore, these businesses frequently receive higher interest rates than they would from a bank.

Commercial finance companies, also known as commercial credit companies, are the third category. These banks give small and large businesses loans to help them pay for new equipment or make other significant changes.

Service Finance Company

Service Finance Company LLC is a nationally licensed sales finance company and an FHA Title I-approved lender. We offer over fifty financing options for home improvement contractors enrolled in the SFC Financing Program, including promotional and standard installment terms. Our program strives to give our contractors the flexibility they need to offer their customers the ability to finance their purchases of HVAC, Windows, Doors, Siding, Sunrooms, Flooring, Water Treatment, Plumbing, Solar, Roofing, Insulation, and many other products.

Top Finance Companies In The United States

#1. Berkshire Hathaway. Omaha, Nebraska

  • Estimated annual revenue in 2022: $282.305 billion.

Berkshire Hathaway is a multinational conglomerate holding company based in the United States. Its CEO is the well-known Warren Buffet, who became a shareholder in the company in the 1960s. Berkshire Hathaway began as a group of textile milling plants in 1839. Now, as of 2020, it’s one of the largest publicly traded companies in the world.

It has a lot of well-known brands as its subsidiaries, like GEICO, Dairy Queen, Fruit of the Loom, and Duracell. However, the majority of Berkshire Hathaway’s subsidiaries are insurance companies.

#2. JPMorgan Chase. New York

  • Annual Revenue Estimate for 2022: $128.296 billion

JPMorgan Chase is one of the oldest loan and finance companies in the United States and one of the largest in the country and worldwide. JPMorgan Chase was the latest in many banks and investment firms back in 1799.

Alexander Hamilton and Aaron Burr were two of the people who started the Manhattan Company, which was the institution that came before JPMorgan Chase.
The company now manages over $2.6 trillion in client assets, operates in over 100 countries, and employs over 250,000 people. JPMorgan Chase has more than 40 subsidiaries, the most well-known of which are Chase Bank, J.P. Morgan, and WePay.

#3. Citigroup. New York

  • Annual Revenue Estimate for 2022: $79.865 billion

Citigroup is a multinational investment bank and financial services company that started when Citicorp and Travelers Group merged in 1998.
The company serves a large international customer base in 160 countries and jurisdictions, with physical offices in 97 countries and over 100 million customers. It is the world’s largest credit card issuer. It is particularly prevalent in Mexico and Asia.

#4. Wells Fargo. San Francisco, California

  • 2021 Annual Revenue Estimate: $78.5 billion

Wells Fargo was founded in 1852 during the Gold Rush to provide banking services to the West and connect it to the rest of the country through shipping and delivery services.

The company expanded to become the world’s most extensive shipping line and the first nationwide express company. The Wells Fargo logo, which features horses and a stagecoach, reflects this history.

The company is a multinational loan and financial service company that provides banking, credit card, loan, mortgage, and other financial services to over 65 million customers worldwide.

#5. MetLife. New York City

  • Annual Revenue Estimate for 2021: $71.08 billion

MetLife is a subsidiary of MetLife, Inc., a holding company. MetLife’s primary business is life insurance, but it also offers health, dental, vision, auto, home, accident, and disability insurance.

MetLife, Inc. provides insurance, retirement, and savings services to clients in over 40 countries. Families, governments, and corporations from the Americas, Asia, Europe, the Middle East, and Africa are among the company’s clients.

#6. Goldman Sachs. New York

  • Annual Revenue Estimate for 2022: $54.568 billion

Goldman Sachs was founded in 1869. It is a multinational investment bank and loan and finance service company that helps its clients with investment management, securities, asset management, prime brokerage, investment banking, and securities underwriting.

The company has over 40 international offices and nearly 40,000 employees. It also has subsidiaries like Goldman Sachs Bank USA, Goldman Sachs Capital Partners, Ayco, Marcus by Goldman Sachs, and Goldman Sachs Personal Financial Management.

#7. Capital One. McLean, Virginia

  • Annual Revenue Estimate for 2021: $32.033 billion

Capital One is a bank holding company that was founded in 1994. Its financial services include credit cards, consumer banking, commercial banking, and auto loans. The company is led by its founder, Richard Fairbank, and was instrumental in the rise of credit cards in the 1990s.

Capital One is the fifth-largest credit card issuer in the country, even though it is a relatively new loan and finance company. It has offices in the UK, Canada, and the US. Capital One’s subsidiaries include Wikibuy, ShareBuilder, Paribus, United Income, and Blue Tarp.

#8. U.S. Bank. Minneapolis, Minnesota

  • Annual Revenue Estimate for 2021: $23 billion

U.S. Bancorp is a bank holding company that began as three separate banks: the United States National Bank of Portland in 1891, the First National Bank of Minneapolis in 1864, and the Farmers and Millers Bank of Milwaukee in 1853.

These organizations grew and merged over time, eventually becoming U.S. Bancorp in 1968. The organization is now best known for its subsidiary, U.S. Bank National Association (more commonly known as U.S. Bank), which provides banking, investment, mortgage, trust, and payment services to its customers.

#9. Fannie Mae. Washington, D.C.

  • Annual Revenue Estimate for 2021: $22.2 billion

Fannie Mae, which stands for Federal National Mortgage Association, was founded in 1938 as part of President Franklin D. Roosevelt’s New Deal. The organization’s goal is to help more Americans afford housing by creating a secondary mortgage market to increase the number of available loans.

Fannie Mae accomplishes this by purchasing mortgage loans from lenders, freeing them up to make more loans to homebuyers.
This loan and finance company is unique because it is both federally sponsored and publicly traded. Freddie Mac and Ginnie Mae are two of Fannie Mae’s siblings.

#10. State Farm Insurance. Bloomington, Ill.

  • Annual Revenue Estimate for 2021: $327 million

State Farm was started in 1922 and is the largest property, casualty, and auto insurance provider in the United States. It offers other insurance and financial services, such as banking, mutual funds, and investment management.

In addition to its more than 58,000 employees, this loan and finance service company have over 19,000 independent contractor agents and services 83 million policies and accounts in the United States. State Farm Insurance Company, State Farm General Insurance Company, and State Farm Bank (F.S.B. are all subsidiaries of State Farm).

Professional Finance Company

Professional Finance Company is a debt collector that works with various original creditors, including healthcare providers, government agencies, consumer retail lenders, and financial services firms.

Even though debt collection companies aren’t always liked, Professional Finance Company has a shocking 1.6 out of 5 stars from 192 Google reviews. Most negative reviews focus on the customer service representatives rudeness, lack of knowledge, and allegations that they refuse to honor previously established payment plans.

Is a Professional Finance Company Legitimate?

Professional Finance Company is an authorized third-party collection service. The company claims to have been in business for over 100 years and is headquartered at 5754 W. 11th St., Ste. 100, Greeley, CO.
If you need to contact a professional finance company, use the following information:

  • Mailing address: P.O. Box 1686, Greely, CO 80632-1686
  • Phone number: 800-864-4391

According to the company, its recovery specialists are “true consumer advocates,” The team is trained to treat consumers professionally, with courtesy, and understanding to resolve debts. However, their 1.1-star rating with the Better Business Bureau (BBB) casts doubt on their claims. Let’s take a closer look at consumer feedback on Professional Finance Company.

Many Complaints Have Been Filed Against Professional Finance Company

In a three-year period ending in 2022, the Consumer Financial Protection Bureau (CFPB) received 220 complaints about Professional Finance Companies.
As with Google Reviews, the complaints appear to center on incompetence, unprofessionalism, and rudeness. Among the allegations are the following:

  • Failure to give consumers 30 days to contest a debt before reporting it to a credit reporting agency.
  • Ignoring requests for debt proof.
  • Inability to respond.
  • Attempts to charge interest without providing proof of debt.

What does a finance company do?

A finance company is a specialized financial institution that helps people get credit to buy consumer goods and services by buying merchants’ time-sales contracts or giving consumers small loans directly.

Who is the best finance company?

  • Power Finance Corporation Limited.
  • Shriram Transport Finance Company Limited.
  • Bajaj Finance Limited. 
  • Mahindra & Mahindra Financial Services Limited.
  • Muthoot Finance Ltd. 
  • HDB Finance Services. 
  • Cholamandalam.
  • Tata Capital Financial Services Ltd.

Is a finance company a bank?

Finance companies, unlike banks and credit unions, do not accept deposits. They loan money, sometimes on fixed terms, sometimes not. “Some specialize, while others offer a wide range of products,” says Chris Kukla, senior counsel for government affairs at the Center for Responsible Lending.

What are the 5 types of finance?

What are the different types of finance and financial instruments?

  • Personal Finance 
  • Corporate Finance 
  • Public Finance 
  • Microfinance

How do I start a finance company?

To start a unique financing company, you must complete preparatory steps.

  • Take relevant courses.
  • Determine your continuing education needs.
  • Pay the first-time fees
  • Financial statements must be submitted.
  • Obtain insurance as well as a surety bond.
  • Locate funds to lend

What are the 7 types of financial services?

Financial Service Types:

  • Banking.
  • Professional Advisory.
  • Wealth Management.
  • Mutual Funds.
  • Insurance.
  • Stock Market.
  • Treasury/Debt Instruments.
  • Tax/Audit Consulting.

What are the 4 areas of finance?

Banks, institutions, public accounting, and corporate finance are the four primary areas of finance.

What are the 3 types of finance?

Finance is broadly classified into public, corporate, and personal finance. Social finance and behavioral finance are more recent subcategories of finance.

Conclusion

Why not use a bank to pay for business expenses? Banks usually have lower interest rates, more flexible terms, and more significant loan amounts than commercial finance companies. The main reason is that banks’ credit policies are highly restrictive. Only 20% of business owners who apply for loans through a bank are approved.

References 

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