TERM OF THE DAY - MARCH 25, 2008

Rahul Gupta (CA Final Student) (1780 Points)

25 March 2008  
TERM OF THE DAY - MARCH 25, 2008
In-House Financing
What Does it Mean?
A type of seller financing in which a firm extends customers a loan, allowing them to purchase its goods or services. In-house financing eliminates the firm's reliance on the financial sector for providing the customer with funds to complete a transaction.
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Investopedia Says...
The automobile sales industry is a prominent user of in-house financing. Many vehicle sales rely on the buyer taking a loan, in-house financing allows the firm to complete more deals by accepting more customers. Whereas banks or other financial intermediaries might turn down a loan application, car dealerships can choose to lend to customers with poor credit ratings.
Related Terms
Credit Rating
An assessment of the credit worthiness of individuals and corporations.
Financing
The act of providing funds for business activities, making purchases or investing.
In-House
Conducting an activity or operation within a company, instead of relying on outsourcing. 
Loan
The act of giving money, property or other material goods to a another party in exchange for future repayment of the principal amount along with interest or other finance charges. 
Vendor Financing
The lending of money by a company to one of its customers so that the customer can buy products from it.