| 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. |
| 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. |
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