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Business Jargons

A Business Encyclopedia

Loan Company

Definition: The Loan Company is a financial institution principally engaged in the business of providing finance to the public, whether by making loans or advances or otherwise, for any activity other than its own (Excludes equipment leasing and hire-purchase activities).

The loan is a kind of an agreement wherein the lender temporarily lends property, usually cash to the borrower with a promise that the borrower will return it along with the interest as per the terms and conditions as agreed upon. The loan companies offer several kinds of loans based on the individual’s preferences. Such as demand loan, term loan, secured loan, unsecured loan, industrial loan, commercial loan, agricultural loan, etc.

The loan companies are usually the small partnership firms that accept deposits from the public at high-interest rates and further give loans to the wholesalers, retailers, small scale firms, self-employed persons, etc. at a relatively higher rate of interest. The loan company does include any business activity which is performed by either the hire-purchase company or the equipment leasing company. Although the nature of all these companies is alike, their business activities are entirely different from each other and at the same time, the funding requirements of all vary significantly.

Related terms:

  1. Hire-purchase Company
  2. Non-Banking Financial Companies (NBFCs)
  3. Bridge Loan
  4. Equipment Leasing Company
  5. Residuary Non-Banking Company

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